Friday, June 14, 2024

‘Developing Principles for Regulation and Pricing of Alcoholic Beverages Sectors in India’ by ICRIER and PLR Chambers

2021–The Indian Council for Research on International Economic Relations (ICRIER) and PLR Chambers have published a report entitled ‘Developing Principles for Regulation of Alcoholic Beverages Sector in India’. The report was released by Mr. Pramod Bhasin, Chairperson ICRIER, and the release was followed by a panel discussion on “Doing Business in India: Regulation & Pricing of Alcoholic Beverages”, by eminent panelists including Mr. Rajiv Mehrishi, Former Comptroller & Auditor General of India, Ms. Nita Kapoor, CEO, International Spirits and Wines Association Of India (ISWAI), , Dr. Sudipto Mundle, Senior Adviser, National Council of Applied Economic Research (NCAER), Mr. Vinod Giri, Director General, Confederation of Indian Alcoholic Beverage Companies (CIABC), and was moderated by Mr. Suhaan Mukerji, Managing Partner, PLR Chambers.

Based on a primary survey and analysis of the State Excise policies and collections, this report found that in most states, implementation of registration and licensing policies are still manual, despite a call for Digital India. In Rajasthan most processes are manual but for CSD the import/export permit is online.

Examining the tax policies and processes of 10 states the study found that states through their excise policies regulate the entire supply chain of alcoholic beverages – from the number of manufacturers, wholesalers and to the number of retailers to be allotted licences and what product they can sell at what prices. Further, the state determines the location of the retailers. The legal drinking age differs across states, varying from 18 to 25 years. Every state has their own format for “don’t drink and drive”, which adds to the labelling cost. One of the core issues in Rajasthan is that the Excise Department ask for the lowest ex-distillery price (EDP) of the neighbouring states and completely ignores inflation and other factors that go into price determination.

Dr. Deepak Mishra, Director & CE, ICRIER said: “Excessive, unpredictable and opaque regulations and tax policies have contributed to high cost of doing business in India’s alcoholic beverages sector. By analysing the best practices at home and abroad, this report makes five broad policy recommendations: develop transparent and predictable policies, focus on technology-enabled interventions, enhance the use of data-driven models, engage in regular consultation with stakeholders, and implement phased reduction in tariffs.”

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