New Delhi: The Beer Association of India (BAI) has urged the Karnataka government to withdraw draft notifications, which proposed increasing taxes by classifying beer based on alcohol content, saying that on average, this measure would lead to a price increase of 10 to 20 percent. percent in the conventional and premium segments.
The draft notification proposes doubling the excise duty on strong beer to Rs 20 per liter in bulk, raising the minimum billing price of beer in the state to Rs 300 per case and additional excise duty (AED) to 195 per cent. of the billing price or Rs 130 per liter bulk, whichever is higher.
The industry body, in a letter to Chief Minister Siddaramaiah, also asked to withdraw the proposal asking beer makers to declare the sugar content of beer on the bottle label and limit the use of sugar to 25 per cent. of the weight of grain malt.
BAI, which represents major beer makers United Breweries, ABInBev and Carlsberg, said these draft notifications are not in the interest of any interested parties and may result in high prices for consumers, which would affect the ease of making beer. Business in the state and may lead to lower tax revenues as sales would be affected.
“The increase proposed in the draft notification would increase prices by 10 to 20 per cent in the mainstream and premium segments. At the same time, it would also make beer unaffordable for the masses with the proposed 35 per cent tax hike. percent in this segment,” said BAI, whose members account for 85 percent of the beer sold in India.
Beer prices have increased twice in the last 12 months and a third increase in such a short time would be detrimental to industry volume as well as state revenue from the beer category.
“Due to the impact on MRP, we estimate that tax revenue from the beer category may actually fall to the tune of Rs 400 crore revenue from this proposal,” BAI said.
Apart from the loss of tax revenue, it would jeopardize an investment of over Rs 5,000 crore in 10 breweries in the state due to low commercial viability and make future investment in capacity expansion doubtful.
Furthermore, high prices and reduced volumes will affect sales, reduce manufacturing activity and affect trade as well as the hospitality industry, BAI said, adding that the proposed changes in the draft notification do not benefit any party. interested.
On displaying the percentage of malt and sugar content on the label of beer bottles, BAI said it will mislead and confuse consumers, add undue compliance burden on beer manufacturers, force breweries to disclose confidential information and will reduce the ease of doing business in the state.
“Therefore, we request you to withdraw the draft notifications or amend them,” the BAI said in a letter written by its director general Vinod Giri.
The draft amendment proposes to reclassify beer into three subclasses and apply differential excise taxes for each of them, instead of a uniform rate for all beers. The government proposed a tax rate of Rs 10, Rs 16 and Rs 20 per bulk liter of alcohol, i.e. less than 5 per cent, 5 per cent to 6.5 per cent and 6.5 per cent to 8 per cent respectively.
“We request to withdraw or revise this amendment to increase the minimum declared price levels to Rs 400 per case for bottled beers, and review and rationalize the minimum of AED 130/BL which will otherwise lead to a huge jump in MRP” . said.
Karnataka is a very important market for the beer industry and is recognized for its strong beer culture, which has been made possible by progressive and supportive policies of the Government.
“It is the third largest beer market in India and, with supporting policies, could become the largest in the coming years. However, we are concerned that some proposed changes could hinder the growth of the industry, diminish the attractiveness of the state’s investment or encourage future investments elsewhere,” he said.
(Except for the headline, this story has not been edited by Republic and is published from a syndicated feed.)
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