Taxes on beer already very high compared to IMFL whisky in Maharashtra: Brewers Association

New Delhi: Defending the Maharashtra government's recent decision to increase excise duty on IMFL whisky and not on beer, the brewers' body BAI said taxes on beer are already very high in the state compared to other markets.

The Brewers Association of India (BAI) has welcomed the new tax regime in Maharashtra, saying it will help to generate more tax revenues for the state government.

Moreover, tax reforms were undertaken for beer in 2018-19, and it was long overdue for spirits, said BAI, a body of the top three beer companies - UBL, Brewer Anheuser-Busch InBev (AB InBev), which owns brands as Budweiser, Hoegaarden and Corona along with Carlsberg which operates here with Carlsberg and Tuborg brands, together accounting for around 85 per cent of sales in India.

"The taxes on beer are already very high in the state. In the last 10-odd years, excise duty on beer has gone up by 32 per cent compared to just 9 per cent on IMFL, leading to a strange situation where a bottle of beer is priced up to 50 per cent more than the competing nips of IMFL," BAI said in a statement.

On Tuesday, the Maharashtra government decided to increase the excise duty on IMFL and country liquor. Now IMFL will be subject to an excise duty that is 4.5 times the manufacturing cost, up from the current rate of three times.

However, the state government has not decided to increase excise duty on beer, which is criticised by several alcohol beverage players.

"We understand that the (state) government intends to increase the tax revenues from alcohol, and if that is the compelling reason, then this is perhaps the best course of action," BAI Director General Vinod Giri said.

"While tax on beer was revised upwards in 2018-19, tax reforms for other categories, most notably, IMFL (Indian-made foreign liquor) and CL (country liquor), had been pending for over a decade now which may have compelled the government to undertake this long overdue tax reform now," he added Giri said: "It is not surprising then that the beer industry has remained flat in the state over the last decade, whereas sectors like IMFL have galloped at an average compounded growth rate of 7 per cent year after year for 10 years." According to him, this move will help correct the relative pricing between liquor and beer and bring growth back in the beer sector.

Further, BAI said brewers have already invested Rs 3,500 crore in breweries in Maharashtra and are providing jobs to 3,500 people.

"We are committed to making fresh investments if a conducive regulatory environment is created for beer," Giri said.

The Confederation of Indian Alcoholic Beverage Companies, which represents the domestic industry and IMFL players, is yet to issue a statement over the development in Maharashtra.

According to industry sources, CIABC and other players are sending a representation to the state government, putting their case forward.