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India. Brewers association pitches for more outlets, relaxed taxation to Karnataka government

A lobby of beermakers has requested the Karnataka government to open more beer and wine shops in the state and bring down taxes.

“We can really expand the market and grow to 40 million cases easily, if more beer and wine outlets are opened,” said Shobhan Roy, director general of All India Brewers Association (AIBA). As part of its recommendations to the state excise department made earlier this week, AIBA has asked for opening 2,500 more beer and wine shops in the state.

Karnataka currently has 3,900 liquor shops selling 30 million cases of beer every year. Southern states of Andhra Pradesh, Tamil Nadu and Karnataka account for almost half of all beer consumed in the country.

The move comes two months after chief minister Siddaramaiah said that the state is considering issuing more licensees after a gap of over two decades.

“The government has not issued any fresh licence for liquor stores for several years. The population has grown in the last two decades and there is demand to issue fresh liquor licenses. We will consider issuing the license in the coming days,” Siddaramaiah said in December.

AIBA has asked for exclusive beer and wine shops to sell alcoholic beverages with lower alcohol content.

Beer makers in India, which is a large whiskey and rum market, have lobbied for years to exclude beer from the high taxation structure on Indian Made Foreign Liquor (IMFL) despite the drink’s lower alcohol content.

To be sure, state governments levy hefty taxes on liquor, specially those with higher alcohol content, as a means to curb consumption of alcoholic beverages in the country. Beer has alcohol content in the range of 5-8%, while IMFL has alcohol content around 42.5%. Beer accounts for less than 8% of all alcoholic beverages consumed in the country, with 270 million cases of beer sold annually.

AIBA has also argued against levying hefty tax on bottled beer in the state saying tax on IMFL is lower than tax on beer.

“Rate of taxation on spirits is much more in other states... we are telling state government (in Karnataka) to not allow beer to subsidize spirits tax,” he added.

In 2015, beer sales fetched the sate government a total of Rs.1,570.64 crore in excise revenue.

25 Feb. 2016

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