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Aerated drinks and mineral water products are set to get costlier. In a move that is expected to hit the soft-drinks industry right before the peak summer season, the government on Monday proposed to increase excise duty on aerated drinks and mineral water products to 21 per cent from the existing 18 per cent.
Soft-drink makers are expected to take price hikes of about two per cent. However, the companies are likely to try and absorb the additional costs on smaller packs meant for single serve and pass it on to consumers by increasing prices of larger packs. Industry players said such an increase in prices is expected to hit consumption, especially in rural regions and smaller towns.
The soft-drinks industry said it was already reeling under pressures of lower demand with consumers taking to healthier options. Last year, it was also hit by unseasonal rains during the peak summer season as well slowdown in rural consumption. Experts said the industry, which was earlier growing at 12-14 per cent year-on-year, saw its growth capped to a mere five per cent last year.
A senior executive with a soft drinks company said in the last three years, the industry had seen excise duty increases amounting to about 8.5 per cent. The government had first increased the excise duty on sugary aerated drinks by five per cent to 17.5 per cent in 2014, which was further hiked to 18 per cent last year.
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