India’s Alcoholic Beverage market is expected to touch $64 billion over the next five years, ensuring India’s position as the fifth-largest contributor to global market revenues in the near to medium term, said a report by International Spirits & Wines Association of India (ISWAI). It said that the segment, with an estimated market size of $52.4 billion in 2021, roughly contributed to 2 per cent of the country’s nominal GDP and remains a significant industry (Rs 3.9 lakh crore, including country liquor).
In the fiscal year 2021, ISWAI said, the industry contributed a significant Rs 2.4 lakh crore in indirect taxes to the state governments, representing many income streams. Customs duty on alcoholic beverages alone accounted for Rs 2,400 crore. The alcohol revenues represent 1.2 per cent of India’s nominal GDP, 7.7 per cent of the total tax collection, and 11.7 per cent of the nation’s indirect tax revenue. The sector contributes a significant 24.6 per cent of the overall own tax revenues of the states, it said.
ISWAI recently unveiled its report titled ‘Economic Value of the Indian Alcoholic Beverage Industry’ that takes an in-depth look at the vital elements and the significant roles played by the Indian AlcoBev sector.
Nita Kapoor, CEO, ISWAI, said, “This is a significant moment for ISWAI and the broader industry, affirming the sector’s substantial relevance to the nation. The AlcoBev Industry serves as a pivotal economic engine, making it imperative for pertinent stakeholders to recognise and value our sector’s economic contributions.”
“The alcohol industry holds a vital position within the national economy, presenting opportunities for growth, job creation, and revenue generation. As we look to the future, the importance of the alcohol industry in India is poised to expand. Therefore, it is crucial to simplify its operational complexities, enhance its Ease of Doing Business (EODB), and unlock its full potential for growth,” Nita Kapoor added.
AlcoBev Industry’s support to other aligned industries
According to the report, around 1,235 million litres of extra neutral alcohol (ENA) were used to produce Indian-made foreign liquor (IMFL) and ready-to-drink alcoholic beverages in 2021. It is estimated that to produce 741 million litres of extra neutral alcohol for IMFL, 1.9 million tonnes of grain are required. This amounts to 0.6 per cent of India’s total grain production of 316 million tonnes in 2021-2022.
Further, approximately 724,611 farms and 36,23,057 farmers are involved in grain production for ENA. 2.9 per cent of the persons employed in the ‘agriculture, hunting, forestry, and fishery sectors are engaged in the production of grain/sugarcane/grapes utilised for ENA for spirits and wine.
Also, about 14-19 per cent of the overall revenues of the organized F&B industry are dependent on the Rs 28,000 crore sales of alcoholic beverages.
In terms of employment, the scope of the alcohol industry is at a staggering 79 lakh individuals, both directly and indirectly. This accounts for 1.5 per cent of the total manpower employed in the country.
Suresh Menon, Secretary-General, ISWAI, said, “Beyond its substantial tax contributions, the industry plays a vital role in supporting farmers’ livelihoods. It is also intricately linked to the food and beverage, hospitality, tourism, and packaging sectors. With India’s demographic shift, the growth of the young and expanding middle class is projected to persist for several more decades, driving an increase in per capita consumption of various goods and services. Constructive governmental policies can streamline the ease of business in this sector, fostering a more conducive operational climate. By addressing and removing certain barriers, we can propel the sector’s growth to the advantage of all involved parties.”