The domestic beverage association has urged the government to bring aerated, non-alcoholic beverages under its GST reform preview and make the drinks more affordable for the common people.
In the backdrop of the soon-to-be-implemented reforms of the Goods and Services Tax (GST), which were announced by Prime Minister Narendra Modi during his Independence Day address to the nation, the government is planning to simplify the tax structure by slashing two tax slabs and retaining only the 5 per cent and 18 per cent slabs. An additional tax of 40 per cent will be levied on select ultra-luxury cars and sin goods.
As per the current tax imposition, aerated drinks attract 28 per cent GST and a sin tax of 12 per cent.
The Indian Beverage Association (IBA) said the rationalisation of GST for the sector and taxing aerated drinks at 18 per cent will make products more affordable, increase investments in the industry and also help generate as many as 1.2 lakh new jobs annually by 2030.
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IBA represents the non-alcoholic beverage industry in India, and leading players, including Coca-Cola, Pepsico, Reliance, Bisleri, Dabur, and Red Bull are its members.
"With rationalised GST rates, 1.2 lakh new jobs annually could be generated by 2030, further boosting rural livelihoods. Over recent years, the sector has invested ₹50,000 crore and plans an additional ₹85,000 crore investment," the body said.
The non-alcoholic beverage industry was valued at USD 49.6 billion in 2023, and is poised to grow to USD 64 billion by 2028, registering a CAGR that outpaces global averages, says the body.
While hailing the government for the “next-generation” GST reforms, the body said reclassification, GST rationalisation and placing the category in a standard GST rate will further unlock the sector's true potential, driving investment, employment, farmer support, and ensuring inclusive growth for the Indian economy.
Since the sector requires raw products like sugar and mango, it ends being one of the largest procurers of agricultural commodities.
Moreover, carbonated beverages are highly price-sensitive as 71 per cent of transactions are at ₹20 or less, and 65 per cent of consumers belong to lower socio-economic classes.
"With demand exhibiting high price elasticity, rationalising GST would help sustain affordability for mass-market consumers," said IBA.
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