10,900 licences a year needed for an alcohol manufacturing unit, says Pahle India Foundation report on ease of doing business

Pointing out at the extent of over-regulation and over-licencing in the country’s alco-Bev the sector, a Pahle India Foundation Report on ease of doing business has said that an alcoholic beverages-manufacturing unit in a state is required to obtain over 10,900 licences in a year from different agencies.

 Alcohol beverages sector was part of the three sectors besides sugar and tourism chose for the study titled, “An Integrated Value Chain Approach to Ease of Doing Business: A Case Study of Sugar, Alco-Bev, and Tourism”. The objective of the study was to establish an integrated value chain approach to ease of doing business (EoDB) will lead to more quantifiable gains and better results for the states.

The Pahle India Foundation report was launched by Mr. Amitabh Kant, CEO, NITI Aayog, in New Delhi recently. During the launch, Mr. Kant said: “The alco-Bev sector is important because the tourism sector and other sectors are impacted by it… This is a sector which can create a vast number of jobs and can be a driver of travel and tourism in many ways. But the sector is constrained by a huge number of regulations, procedures and state governments putting large impediments leading to lack of transparency.”

The report highlights some of these challenges that businesses in the alco-bev industry face due to overregulation and overlap in formulation and enforcement of rules and standards by the three different enforcement bodies— State Excise, FSSAI, Legal Metrology and BIS. “Factors like different tax regimes, price determination models, and levels of openness towards easing the business the environment has resulted in making India 36 different markets for the alco-Bev industry”, the report states.

Price determination by state governments is another major roadblock for the sector. In all the states, the prices are determined by government intervention which varies across states.

The report makes several critical recommendations for improving the ease of doing business in this industry.  Some of the important recommendations pertain to revamping the Excise Act, Licensing, Brand Registration, Label Registration, Excise Adhesive Labels (EALs), and  Pricing. It suggests the need to review the Excise Acts to remove redundancies and update the acts according to the business requirements.

The alco-Bev industry in India has been growing at more than 12 per cent CAGR for the decade starting 2001, making India one of the fastest-growing markets in the world.

The budget estimates for the total excise revenue generated by the alcoholic-beverages industry alone in 2018-19 is to the tune of INR 1.4 lakh crores, which is a 15 per cent the increase from the last year’s revised estimates.