India’s non-alcoholic beverages market is expected to grow at CAGR of 8.7 per cent to ₹1,47,233 crore by 2030, from around ₹67,100 crore in 2019, according to estimates by economic policy think tank, ICRIER. The report, commissioned by the Indian Beverage Association, however pointed to challenges such as high GST taxation fuelling informal and counterfeit market.

Nearly 80 per cent of the non-alcoholic beverages sector, which includes soft drinks, juices, ready-to-drink tea and sports drinks, is still unorganised in the country. It added that India does not feature among the top 50 countries in global trade in beverages and exports and its per capita volume sales (21.36 litres in 2018) is lower than other developing markets.

Arpita Mukherjee, Professor, ICRIER, one of the authors of the report, said given the abundant supply of raw materials, India has the potential to become a global hub of the non-alcoholic beverages. The total job creation in this sector is estimated to be 6,91,491, from both upstream and downstream operations, the report added.

With growth forecast of 8.7 per cent CAGR till 2030, the report pointed to the slowing down of growth estimates. It added that the previous recorded growth of the sector was CAGR of over 13 per cent in 2010-2019. “Within similar food product categories, the growth of non- alcoholic beverages is lower than others like chocolate and sugar confectionery and salty snacks,” the report said.

Key challenges

The report said the sector is facing key challenges such as unfair competition from the unorganised sector and counterfeit products, high GST and additional sin tax on aerated beverages, among others. “A high tax of 40 per cent (28 per cent GST + 12 per cent compensation cess) on carbonated drinks, irrespective of nutrition or sugar content, has created a large counterfeit market and informal sector,” the report said.

The report also pointed out that GST rate of 28 per cent, along with 12 per cent cess on carbonated fruit beverages or drinks, irrespective of the fruit content is not in-line with the FSSAI regulations. It, therefore, recommended that product definitions in the GST tax slabs must be aligned with the FSSAI product regulations.

The economic policy think-tankalso recommended that taxes should be designed in a way that it drives healthy consumption and should be based on nutrition or sugar content. “ICRIER recommends that moderate taxation can lead to more revenue collection, enhance investment in R& D and product innovation, reduce supply chain wastages, increase farmers’ income and make India one of leading World Beverage Hubs,” it added.

Jagadish Prasad Meena, Secretary General, Indian Beverage Association (IBA), added ,“With increasing agricultural diversification and demand side push factors, India has the potential to be the world leader in beverages processing through enabling policies and fiscal incentives. This report by ICRIER attempts to provide a policy roadmap for the Government to focus on key levers to help connect global supply chains of beverage companies with the farmers and food producers in India.”

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