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AIBA pushes for beer tax reduction

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(AIBA) has urged the Centre to set up a beer board under the ministry of food processing industries (MoFPI), and reduce taxes on the brew. AIBA is demanding that beer not be clubbed with hard liquor, and taxation should be on the absolute alcohol content in the product. Beer’s alcoholic content (ranging between five and eight per cent) is lower than other beverages, including wine (12 per cent) and Indian-made foreign liquor (IMFL) or hard liquor (over 40 per cent). AIBA believes that applying a one-size-fits-all taxation policy on beer manufacturers is discriminatory

The rate of taxation on beer ranges between 1.6 times the rate imposed on hard liquor in Kerala and 5.7 times in Haryana. In addition, the excise duty per litre of beer in India is highest in the world. The overall taxation ranges between 25 and 65 per cent, and on most brands it is charged at about 60 per cent, according to AIBA

“The beer trade contributes Rs 15,000 crore to the exchequer,” stated the association. The Indian beer industry, comprising 89 breweries, is currently valued at $4.13 billion.

Industry experts believe that unreasonable taxation combined with other regulations have led to a slowdown in the sector. In 2012-13, the sector witnessed a growth of just over 3.3 per cent, which was down from the nine per cent growth it registered in 2009. There was also a 10 per cent decline in production.