‘Taxes eat up 70% of alcohol bottle price’: ISWAI seeks tax rationalisation

ISWAI CEO Sanjit Padhi said high taxes leave limited room for industry margins and called for states to focus on premiumisation rather than repeated tax hikes. He also sought greater pricing freedom for premium alcohol products.

By Shivani Bazaz

(Photo Credit : AI Generated )

India’s alcoholic beverages industry has called for tax rationalisation, with the sector flagging that taxes account for 65–70% of the price of a ₹100 alcohol bottle in several states and can go as high as 80% in some markets.

Speaking to CNBC-TV18, Sanjit Padhi, CEO of the International Spirits & Wines Association of India (ISWAI), said the high tax burden leaves limited room for manufacturers and margins across the value chain.

“Taxes in that ₹100 is anywhere between 65 to 70%. In some states, it is 80%,” Padhi said.

According to Padhi, states should focus on generating higher revenues through premiumisation rather than repeatedly raising taxes. He said better retail infrastructure and pricing structures could encourage consumers to move up the price ladder, thereby increasing the value of the market.

The comments come as ISWAI estimates that India’s alcoholic beverages market has reached ₹6.2 lakh crore in 2025, up sharply from ₹3.9 lakh crore in 2021.

Padhi said volume growth during this period was around 4% CAGR, while premiumisation has emerged as one of the key drivers of value growth. The premium segment has increased its share from around 29% to 32%.

“Essentially, the state has to look at generating more revenue, which it should for its larger social activities, not by raising taxes, but by premiumisation,” Padhi said.

He also called for greater pricing freedom for premium alcohol products, arguing that current price-control mechanisms can delay price revisions and hurt investment and innovation.

According to Padhi, price approvals in some states can take two to three years, meaning companies can be left waiting for price revisions even as inflation and costs rise.

“Pricing freedom, especially for premium products, is essential because it drives investment, innovation,” he said.

Padhi questioned the need for stringent price controls on premium products, arguing that consumers who can afford premium products should have greater choice.

“Why do we have to protect premium products through price control when the consumer anyway can afford it?” he said.

The ISWAI report estimates that the AlcoBev sector contributes around ₹4 lakh crore in taxes annually, accounting for 6.6% of India’s total tax collections and 19.1% of states’ own tax revenues.

Padhi said the industry’s economic contribution needs to be better recognised by policymakers, particularly at the state level, given that alcohol is a state subject.

The report also highlights the sector’s wider economic footprint. The industry is linked to 24.2–25.5 lakh farms and 121.4–128.1 lakh farmers through agricultural inputs used in domestic alcoholic beverage production.

It also estimates that alcohol-related demand accounts for 14–19% of organised F&B revenues, with 9.2–11 lakh people employed in alcohol-licensed F&B outlets.

Overall, the industry supports around 144 lakh jobs across agriculture, F&B and retail, according to ISWAI.

Padhi said the industry’s objective is not to drive higher volumes but to create greater value through premiumisation and better revenue utilisation.

“The objective of the industry is not to drive production. The objective of the industry is to drive better revenue utilisation. It’s to drive what we all have: drink better, not more,” he said.