IBA asks finance ministry to reduce GST on aerated beverages to 18%

The Indian Beverage Association has written to the Finance Ministry seeking a GST cut on aerated drinks to 18%, citing Rs 85,000 crore investment, job creation and rural demand

The Indian Beverage Association (IBA) has written to the Finance Ministry asking it to reduce the goods and services tax (GST) on aerated beverages sector in India to 18 per cent and not as a sin/demerit good. 

 

In an interview with Business Standard, Sanjeev Agarwal, group chairman of the MM Agarwal Group, which houses Moon Beverages, an aerated drinks bottler, said the sector has committed to investing ₹85,000 crore by 2030, create 3 million jobs and also install 2 million coolers at grocery stores across the country. 

 

“If the GST rate stays at 40 per cent, it will be difficult to invest. If the GST is reduced, we will be able to pass on the benefit to the consumer. In aerated beverages, 71 per cent of the transactions take place at the ₹20 price point, which sees a higher demand in rural India,” he added. 

   

Agarwal said if the GST rate is at 40 per cent, there could be an impact on demand to the tune of 10 per cent. 

 

“In line with the Hon’ble Prime Minister’s vision for affordability to drive consumer buoyancy especially in Tier 2/3 cities, carbonated beverages are highly price-sensitive, with around 71 per cent of transactions at ₹20 or less, around 90 per cent of sales via kirana stores and traditional trade outlets, and around 65 per cent of consumers belonging to lower socio-economic classes,” IBA said in its letter. 

 

“We would request that the R. 0-30 priced beverages could kindly be accorded an 18 per cent GST treatment as the first step. We will, in earnest, demonstrate the results to you so that this could be expanded to other price-points in the near future, subject to your satisfactory validation,” the letter added.