January 12, 2015 Print

India has the world’s third-largest and fastest-growing market for alcoholic beverages. Its whiskey market is estimated to be 300 million cases, which makes it the largest in the world. Nevertheless, doing business in India remains difficult for both domestic and foreign alcohol producers. India would benefit tremendously from opening up its liquor market.

A recent study by India-based Centre for Public Policy Research (CPPR) states that restrictive liquor policies in India have harmed both consumers and businesses, as well as fueling black-market activities. The study reports that the average customs duties on Imported Foreign Liquor (IFL) is 150 percent, and state taxes push the total liquor tax burden to around 550 percent. As a result, liquor prices in India are significantly higher than in 95 percent of the countries in the world, and two to four times more expensive than the global average price.

It is estimated that the combined tax earnings of the states and union territories (excise) from alcohol beverages in 2011 fiscal year is around $4.67 billion USD, accounting for about 16 percent of their total revenue.

The study is part of an ongoing Atlas Free Trade research and education project that aims to strengthen research and collaboration among global think tanks in promoting trade liberalization. The project also supported a study on the costs of transportation published by Eastern Africa Policy Centre in September, and the study “Public Procurement in FTAs: The Challenges for Malaysia,” published by the Institute for Democracy and Economic Affairs in December.

Learn more about liquor trade liberalization in India.