Beer producers urge Karnataka government to withdraw draft notifications, fear 10-20% price hike – ThePrint – PTIFeed

New Delhi, Oct 27 (PTI) The Beer Association of India (BAI) has urged the Karnataka government to withdraw draft notifications proposing an increase in taxes on beer through alcohol content-based classification, saying the move would lead to a price increase of 10-20 per cent on an average in the mainstream and premium segments. .

The draft notification includes doubling of excise duty on hard beer to Rs 20 per bulk liter, raising the minimum invoice price for beer in the state to Rs 300 per case and Additional Excise Duty (AED) to 195 per cent of the invoice price or whichever is more. if high, Rs 130 per bulk liter.

BAI, which represents leading brewers United Breweries, ABInBev and Carlsberg, said these draft notifications are not in the interest of any stakeholders and could lead to high prices for consumers, impact the Ease of Doing Business in the state and lead to lower prices. tax revenues as sales will be affected.

“The increase proposed in the draft notification will increase prices by 10-20 per cent in mainstream and premium segments. At the same time, the proposed 35 per cent increase in taxes on this segment will make beer unaffordable for the masses,” said BAI, whose members account for 85 per cent of beer sold in India.

Beer prices have been increased twice in the last 12 months and a third increase in such a short time will harm both the industry volume and the State’s revenues from the Beer category.

“Due to the impact on MRP, we estimate that tax revenues from the beer category may actually fall to Rs 400 crore revenue from this proposal,” BAI said.

Apart from the loss of tax revenue, it will also put more than Rs 5,000 Million investment in 10 breweries in the state at risk due to low commercial viability, making future investments in capacity expansion doubtful.

Additionally, high prices and reduced volumes will impact sales, reduce production activity and affect the hospitality sector as well as trade, BAI said, adding that the changes proposed in the draft notification are not in the interest of any stakeholder.

BAI said displaying the percentage of Malt and Sugar content on the label of beer bottles would mislead and confuse consumers, impose undue compliance burden on brewers, force breweries to disclose confidential information and reduce the ease of doing business in the country. state.

“We therefore request you to withdraw or amend the draft notifications,” BAI said in a letter written by its Managing Director Vinod Giri.

The draft amendment proposes reclassifying beer into three subclasses and imposing different excise duty on each, as opposed to applying a single rate to all beers. The government has proposed a tax rate of Rs 10, Rs 16 and Rs 20 per bulk liter based on alcohol; below 5 percent, 5 to 6.5 percent, and 6.5 to 8 percent, respectively.

“We request to withdraw or revise this amendment to increase the declared minimum price levels for bottled beers to Rs 400 per case and to review and rationalize the minimum AED 130/BL which would otherwise lead to a massive jump in MRP .” he said.

Karnataka is a very important market for the beer industry and is known for its strong beer culture, made possible by the Government’s supportive and progressive policies.

“This is India’s third largest beer market and with supportive policies, it could become the largest in the coming years. “However, we are concerned that some of the proposed changes could hinder the growth of the sector, reduce the state’s investment attractiveness or divert future investments elsewhere,” he said. PTI KRH KRH MR

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