India is one of the fastest growing alcoholic beverages markets globally with an estimated market size of USD 52.5 billion (about Rs 3.9 lakh crore), the Indian Council for Research on International Economic Relations (ICRIER) has said.
The market is expected to grow at a CAGR of 6.8 per cent till 2023, it said. The industry contributes to around 15 lakh jobs.
FDI up to 100 percent is allowed under the automatic route for brewing and distillation of alcohol, subject to the license approval by the appropriate authority.
Current Scenario
- ICRIER said over 70 per cent of the growth in alcoholic beverages consumption in India in the next decade will be driven by the lower middle and upper middle-income groups, and there is a growing trend towards product premiumisation.
- Beer, Spirit and Wine sectors are the uptrend growth sectors.
Investment Opportunities
- The sector is open to foreign investments and many states offer subsidies for local manufacturing (like Maharashtra and Karnataka for wines).
- At present, there are around 110 wineries in India; 72 of them are in the state of Maharashtra. Wine production in India is spread across five major wine producing regions, including Nashik and Pune in Maharashtra state and Bangalore, Hampi Hills, and Bijapur in Karnataka state.
Why Invest?
- From the demand side, said ICRIER, factors such as rapid urbanisation, changing consumer preferences and a sizeable and growing middle-class population with increased purchasing power have contributed towards growth in demand for alcoholic beverages.
- The number of people consuming alcohol increased from 21.9 crore in 2005 to 29.3 crore in 2018 and is projected to increase to 38.6 crore by 2030.
- The share of the upper-middle income group in alcohol consumption has increased steadily from 7 per cent to 21 per cent and is expected to increase to 44 per cent by 2030.
Read Ahead
- The market’s largest segment is the segment Spirits with a market volume of USD 33.1 billion in 2022.
- FDI up to 100 percent is allowed under the automatic route for brewing and distillation of alcohol, subject to the license approval by the appropriate authority.
- Taxes and duties: The Central government imposes Custom Duties and Social Welfare Surcharge on import of wine into India and Central Sales Tax on inter-state sale of wines. The State government levies duties, such as Excise Duty, Value Added Tax, Transport Fee, Import Fee, Export Fee, Toll
- Tax, Label Fee etc. on import, purchase, sale, or manufacturing of alcohol, including wine, in their respective state. In July 2007, the Government of
- India imposed a basic customs duty on all wine products (HS code 2204) at 150 percent. An additional 18 percent Integrated Goods and Services Tax (IGST) is also charged on the imported wine.