It's high time India reduces duties to boost liquor exports

Alcoholic beverages are among the top three sources of revenue earned across most States. According to ICRIER, there seems to be a lack of transparency, predictability, and clarity in the tax regime to ensure that revenue earning objective is aligned with other objectives of the government like 'Make in India' and exports from India.

The governance and pricing models for alcoholic beverages vary widely across the States. The States through their excise policies control the entire supply chain of alcoholic beverages from manufacturing and distribution to registration and retail.

The government should focus on phased tariff and other duties reduction and Indian companies should be encouraged to export to improve the trade balance. Duty reduction for intermediate products can enhance value addition in India and boost domestic manufacturing potential.

This can help India in bringing in more investments into the sector, encourage innovation, improve ease of doing business, increase domestic manufacturing capabilities and enhance exports, said Indian Council for Research on International Economic Relations (ICRIER)

Liquor industry body CIABC has recently requested the Government to set up an export promotion council for alcoholic beverages under the aegis of the commerce ministry to promote the outbound shipments of the sector. The Confederation of Indian Alcoholic Beverage Companies (CIABC) has sent a communication to the Government in this regard.

Currently, India exports around 7 million cases only down from 14 million cases in the past, and a concerted effort and mechanism are required to promote exports of alcohol from India.

India has a large distillation capacity as well as several unique products such as Fenny and Mahua spirits, and exports of these can be promoted in a systematic manner. India's major export destinations include Africa, the Middle East and Asia.

These are relatively low-value exports. India has been producing some high-end single malts and companies like Amrut Distilleries, Paul John, Radico Khaitan are now in a position to explore markets with high-value potentials such as the EU, UK, US and Japan, Taiwan, South Korea, Hong Kong, and Australia. India needs to reduce duties both at the Union and State level and get important markets to do likewise which can be addressed in FTAs.

A boost in exports will also support the sugarcane industry of the country. Grapes and fruit wines can also be promoted. Currently, Indian fruit wines are being showcased at the London wine fair. More such efforts should be made to create awareness about Indian liquor products.