Phased reduction of alcoholic beverages tariffs needed: Icrier report

India should implement phased reduction in tariffs for the alcoholic beverages (alcobev) sector and create transparent policies, according to Indian Council for Research on International Economic Relations (Icrier).

In a report titled ‘Developing Principles for Regulation of Alcoholic Beverages Sector in India’, jointly developed with PLR Chambers, Icrier proposed a five-point policy to develop a transparent and predictable regulatory and pricing framework for the Indian alcoholic beverages sector.

The agency said the government should develop transparent and predictable policies, focus on technology-enabled interventions, enhance the use of data-driven models, engage in regular consultation with stakeholders, and implement phased reduction in tariffs for the Indian alcoholic beverages sector.

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Deepak Mishra, director and chief executive, Icrier, said, “Excessive, unpredictable and opaque regulations and tax policies have contributed to high cost of doing business in India’s alcoholic beverages sector. By analysing the best practices at home and abroad, this report has made the five broad policy recommendation that would go a long way in helping this sector.”

India is one of the world’s fastest growing markets for alcoholic beverages, with an estimated market size of $52.5 billion in 2020. The market is expected to grow at a CAGR of 6.8 % between 2020 and 2023.

Production of alcoholic beverages increased by about 23.8% between 2015-16 and 2018-19 and the sector generated around 1.5 million jobs and $48.8 billion in sales revenue in 2019, the report said.

This sector is among the top three revenue earning sectors of the states. During the pandemic, 21 states have changed their policies to allow home delivery or imposed a Covid-19 cess to mitigate the revenue shortfall. However, in some cases, the study found this has led to lower revenue earnings. Thus, policies may not be achieving the desired objectives.

The report also highlighted key barriers the sector was facing, which include regulatory barriers and several variations across states, price control barriers and high import tariffs.