Budget 2024-25: Bringing high spirits home on alcobev players' wish list

The Perfect Pour, a Mumbai-based wine and spirits consulting firm, urges the Budget to focus on a unified ecosystem, standardised pricing, and GST

Allowing home-delivery of alcohol, placing it under the GST regime, and having a centralised pricing mechanism are some key items on the Budget wish list of alcohol beverages (alcobev) players. The Union Budget 2024 will be a vote-on-account, or an interim Budget, and is set to be announced on February 1. 

Industry body International Spirits and Wine Association of India (ISWAI) wants the government to lower the blending target as extra-neutral alcohol (ENA), the purest form of alcohol,  has become costlier due to fluctuating prices of un-denatured alcohol for production. Un-denatured alcohol is used for making beverages.

“While the alcobev industry is a state subject, the Union Budget 2024 holds immense significance for the alcobev industry's key input material ENA. The ethanol blending program (EBP) aims to achieve 20 per cent biofuel blending in petrol by ethanol supply years (ESY) 2025-26,” said Nita Kapoor, chief executive officer (CEO), ISWAI.

“As a consequence, the pricing of un-denatured alcohol meant for alcohol production has been fluctuating, leading to a 9 per cent increase in ENA cost over the last 12 months. Given the importance of the alcobev excise collections to states, ISWAI urges for a more temperate blending target,” she said.

VBev, a Mumbai-based alcobev brand, said an efficient tax policy was needed. VBev expects the announcement to include impactful free-trade agreements (FTAs) with other nations to unlock new opportunities for the beverages sector, elevating global competitiveness, and opening new markets for Indian beverages. Additionally, a well-balanced tax structure, supportive policies, and strategic international collaborations will help make a substantial contribution to India’s economic development, VBev added.

“Our optimism is not merely aspirational but grounded in the anticipation of a transformative fiscal plan that propels growth, nurtures innovation, and champions sustainability,” said Sumedh Singh Mandla, CEO of VBev. The Perfect Pour, a Mumbai-based wine and spirits consulting firm, expects the Budget to focus on a unified ecosystem, standardised pricing, and GST. The firm said, currently, there is no existing comprehensive review of alcohol policy documents in India, with certain states holding policies that haven’t been updated for over 4-5 decades. “This makes it difficult for researchers and policymakers to make intersectoral evidence-based reforms. Hence, there is a lack of strong centralisation of policy. The government may look at bringing it under GST to create a uniform system,” said Vaniitha Jaiin, founder, The Perfect Pour.

Jaiin also threw light on the consumers’ side. India has a complex duty structure due to which the cost of alcohol varies widely across all states, fluctuating around 100-400 per cent. “While Indian consumer per capita income is increasing, yet the consumer feels unpleasant about paying 2-3 times more for the same alcohol that is priced lesser in the neighbouring state. This is where a centralised policy system, a much-needed one, can control the pricing (MRP and MSP) and ensure buyers are comfortable purchasing from their state resulting in higher excise and VAT revenue generated for the state,” she said. Jaiin also urged the government to review a comprehensive plan that can create an ecosystem that may allow aggregators to home-deliver alcohol. “This would be a forward step if it is in effect as consumers prefer easy shopping channels for their day-to-day purchases. This can be a real game changer if the host portal remains with the government (an inventory manager) to control and monitor the age and purchase compliance,” she added.