India's non-alcoholic beverages market is expected to grow to Rs. 1472 billion by 2030 at a compound annual growth rate (CAGR) of 8.7 per cent, from around Rs. 671 billion in 2019. Carbonated soft drinks (CSDs), ready-to-drink teas (RTDs), energy drinks, and sports drinks accounted for more than 60 percent of the global market. Carbonated beverages are the most popular among Indians, followed by bottled water and fruit beverages and juices.
Also, the non-alcoholic beverage sector shows enormous potential for developing job opportunities in the -country - the total number of jobs produced in 2018-19 was around 6,91,491, according to the report by The Indian Council for Research on International Economic Relations (ICRIER).
Further, for every Rs. 1 crore of output produced in the non-alcoholic beverage industry, 8.9 more jobs are created in the economy, both directly and indirectly, the study found.
Suman Bery, Vice Chairman, NITI Aayog said, “The non-alcoholic beverage sector is a significant and promising industry that holds immense potential. The non-alcoholic beverages is a crucial component contributing towards the country’s economic growth and will further evolve with policy and fiscal support from Govt. of India. However, this can only happen if the Govt. and industry work hand in hand to further encourage innovation, work towards enhancing famers’ income and ensure reduction of wastage in supply chain.”
Sudhanshu Pandey, Secretary, Ministry of Consumer Affairs, Food & Public Distribution, Govt. of India, further added, “The non-alcoholic beverage sector has a crucial role to play in driving overall India's economic growth and making the country, “Atmanirbhar.” It's heartening to see many global and domestic companies, including start-ups investing in this sector. Further lowering of taxation will promote greater participation by the organised part of the industry. This will help realise the true potential of the sector"
Jagadish Prasad Meena, Secretary-General, Indian Beverage Association (IBA) said, “With increasing agricultural diversification and demand-side push factors, India has the potential to be the world leader in beverages processing through enabling policies and fiscal incentives. This report by ICRIER attempts to provide a policy roadmap for the Government to focus on key levers to help connect global supply chains of beverage companies with the farmers and food producers in India. IBA would closely work with the government and other stakeholders to implement these measures and realise this dream.”
It has been found that India has one of the highest tax rates globally, and low-income groups are facing the burden of 40 percent tax on carbonated soft & fruit drinks.
Dr Deepak, Mishra, Director and CE, ICRIER, said, “India is the largest global producer of several raw materials used in the manufacturing of non-alcoholic beverages. Yet around 25-30 percent of the fruits and vegetables grown in this country, are wasted in the supply chain. We are far behind other developing countries in exports of beverages. For example, in 2020, we were the 59th global exporter of fruit and vegetable juices, while Brazil ranked first. With the PLI scheme and other incentives, there is scope to enhance the domestic manufacturing capacity and exports. Our study identifies hurdles related to taxes, product classification and infrastructure and suggests policy measures to make India a global hub for beverage processing.”
The report recommends that government should focus on enhancing farmers' income by using fruit pulp/puree/juices and examine taxes on fruit-based beverages and juices. The report proposes reducing the tax on fruit pulp/puree-based goods from 12% to 5% to stimulate the expansion of the Indian juice/beverage business and farmers.
In addition, the report further recommends, that in the Union Budget of 2023-24, taxes should be designed in a way that it drives consumers to healthy consumption. There should be nutrition-based taxes. For example, carbonated sugar-based drinks can have the highest GST slab of 28 percent, but those like carbonated fruit juices, with no added sugar or mineral water should be in the lowest tax bracket. The product definitions in the GST tax slabs must be aligned with the FSSAI product regulations as moderate taxation can lead to more revenue collection, enhance investment in R&D and product innovation, reduce supply chain wastages, increase farmers’ income and make India one of the leading global beverage hubs.
On the other hand, beverage firms and their associations should also support FSSAI's "Eat Right Campaign." More cooperation and interactions between businesses, their associations, and the government is needed make India one of the leading global beverage production hubs.