Carbonated Beverages Industry In India: Tax Policy To Promote Growth, Innovation And Investment

Dr. Arpita Mukherjee, Professor, ICRIER;Ms. Eshana Mukherjee, External Consultant, ICRIER

With a huge chunk of the capital investment in the industry directed towards the creation and expansion of manufacturing and bottling facilities across various states in India in Tier 2 and Tier 3 cities, the industry employs tens of thousands and holds the potential to employ more. [...] The sector is a key contributor to the ‘sunrise’ food processing industry and a backbone of the network of kirana shops and retailers in the country. [...] It presents the trends and growth in the sector in India; discusses global best practices in taxing sugar-sweetened beverages; examines the Indian tax regime in the light of such global best practices and suggests ways to address the twin objectives of limiting the intake of added sugars in beverages and optimising the tax revenue collection. [...] Further, reclassification based on sugar content and India has the highest standard GST rate in Asia, taking into account the new varieties of and the highest number of different slabs of products in the market and (b) by formalising the informal sector. [...] While Section 3.1 presents the contribution of the sector to the Indian economy, based on qualitative interviews of some of the major beverage companies, Section 3.2 and Section 3.3 present the market size of the sector and analyse the changes in consumption patterns across the sector and various sub-categories respectively.