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The brewers in the country are a worried lot as the beer industry has been declining in the last two years due to the prevailing tax structure.
Urgent steps are required to correct this and bring some cheer for both industry and consumer in the coming summer months, says Shobhan Roy, Director General, All India Brewers Association (AIBA).
The market was valued at around ₹24,000 crore in 2013-14. However, in the past decade the CAGR has headed south from 12.1 per cent in 2003-04 to 3.3 per cent during 2012-13. In 2013-14 also growth was more or less flat, he said.
The beer segment is hit by high sales tax, restrictive excise laws and local/State taxes, said Roy.
Southern marketsThe major market for the beer is the southern States of Andhra Pradesh, Tamil Nadu and Karnataka, which account for almost 50 per cent. Maharashtra and Madhya Pradesh were the other big markets.
There are 89 breweries and beer contributes ₹15,000 crore to state exchequer, he claimed.
The AIBA, which represents about 80 per cent of the breweries in the country, argues that for taxation purpose it would be rational to consider the alcohol percentage in beer and other IMFL. Ideally beer with lower alcohol content cannot be clubbed with hard liquor or other alcoholic spirits. This parity now, plus the local taxes have pushed up the rates quite high, he said.
Globally, taxes on beer are low as it contains lower levels of alcohol and spirits with higher percentage alcohol are taxed higher. In India, beer is taxed more than spirits in all States.
Roy met the Minister of Excise of the Telangana State T Padma Rao and made a presentation. Telangana has five breweries and sales have been dipping in recent years. Last year, growth was flat with sale of 30 million cases out of the total 80 million cases in united Andhra Pradesh.
He wanted the Centre to bring duties on beer on par with alcoholic spirits. The Association has also urged the Centre to issue separate licenses for sale of beer through exclusive beer retail outlets on the lines of some States like Karnataka and Maharashtra.
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