Indian Brewers seek level playing in Delhi market against imported beer from Bhutan, Nepal

New Delhi: Indian brewing majors have demanded a level playing field in the Delhi market for beer saying that the domestic manufacturers are charged 150 per cent excise duty while those coming from Bhutan and Nepal are taxed at lesser rates.

This absence of custom duty on the import of beer from Bhutan has put a "huge disadvantageous" situation for the Indian brewers as they are sold below the MRP price of the Indian beers, the Brewers Association of India (BAI) said in a letter to the Delhi government.

The Indian government allows imports without customs duty from countries like Bhutan and Nepal to encourage industry there.

Some state governments impose an additional excise duty on imported beer to offset the absence of customs duty and to ensure a level playing field against imported beer from Bhutan or Nepal, the association said.

"However, the Delhi government does not apply any countervailing duty on beer imports. Further, it also applies lesser taxes on imports, i.e., 65 per cent Excise Duty and 0 per cent Additional Excise duty compared to 150 per cent Excise Duty and 10 per cent Additional Excise Duty on domestic beer," it said.

Taking advantage of this, a large number of small Indian companies have started importing beer from Bhutan and Nepal to sell in Delhi.

In this process, the government also earns Rs 20 per bottle (650 ml) less in taxes from imported beer.

"Using the higher margin to put in trade and brand pushing, several brands from Bhutan are flooding the Delhi market. Many of these brands are unknown, unheard of and do not sell anywhere else in India. Very little is known of the breweries and quality standards followed in their production," BAI said in its letter by its DG Vinod Giri.

BAI represents leading beer markers - United Breweries, ABInBev and Carlsberg, which together account for 85 per cent of the beer sold in India.

"Furthermore, if such discrimination and higher margins on supplies from these countries continue, there is a fear that other beer makers may move investment there, which would be detrimental to the government's policy of 'Make in India'," it said.

BAI has recommended "to impose same excise duty at the rate of 150 per cent on imported beer as it is applied on domestic beer".

By doing so, the government will earn the same revenues as domestic suppliers and ensure a level playing field.

"Further, to maintain MRP (maximum retail price) parity, the importers from Bhutan will need to adjust their supplier prices, thus reducing the excess margin which is feeding brand pushing," it said.

According to a study by Oxford Economics, the Indian beer industry contributed Rs 92,324 crore (USD 10.6 billion) to India's economy in 2023, which represented 0.3 per cent of the national GDP.

It contributed Rs 51,376 crore (USD 5.9 billion) in tax revenues through excise, sales taxes, other taxes, and the taxes paid by the downstream value chain, it said.