It however needs an enabling policy regime that takes a long term view of the industry
New Delhi, Friday, April 12, 2013: The Indian Beverage Industry is at the cusp of a revolution, fuelled by changing lifestyles, a growing middle class, rapid urbanisation and increased disposable income. The Indian Beverage Association (IBA) expects the beverage industry to continue its strong growth trend, witnessing double digit growth during the year 2013. This growth will be despite the recessionary trends being shown by most economies the world over, including the Indian economy. Experts from the Indian beverage industry made these remarks at a seminar organized by the Indian Beverage Association in Delhi on the subject – “Agenda For Growth: Indian Beverage Industry – Leveraging International Practices”. The nonalcoholic ready to drink beverage industry has been growing at a compounded annual growth rate of 13% since 2009 and is one industry that has defied the slowing economic growth.
The seminar was addressed by some leading voices from the Indian and International beverage organizations like Shri Rakesh Kacker, Secy, Govt of India, Ministry of Food Processing Industries; Shri K. Chandramouli, Chairperson, FSSAI; Mr. Geoff Parker, President, International Council of Beverages Associations and Patricia Vaughan, Sr. Vice President, American Beverage Association.
At the deliberations in the seminar, speakers observed that the macro indicators and the demographic dividend favour robust growth for the beverage industry in India. With an enabling policy regime, which includes a more rational tax structure, frequent consultations with the industry on food regulations, giving the industry its due recognition as manufacturers of high quality, healthy and nutritious products as well as life critical products like water, will further help the industry realise its potential. As an industry that has strong backward linkages with agriculture, its growth will also benefit millions of farmers across the country.
One of the key areas of intervention where the beverage industry expects Central and State government intervention is in the area of GST and Direct Tax Code (DTC). The beverage industry has learnt that the earlier plan of single rate for both Central GST and State GST is reportedly being talked about as three different rates. This defies economic logic and is indicative of difficulty in moving forward the proposal of Constitutional amendment in the Indian Parliament.
The IBA also suggests that the beverage industry be made a key stakeholder in the introduction of GST and should be a natural partner in the process of consultation while formulating the plan and roll out of GST. The extent of involvement of industry currently in the consultation process needs to be scaled up and made more intense and frequent.
Similarly, the VAT rate of 6% is applicable to fruit juice and fruit juice based drinks. Despite the states coming to an understanding that fruit juice and fruit juice based drinks will be under 6% VAT rate, some states have increased the VAT substantially. The move to increase VAT on fruit juice and fruit juice based drinks will subvert growth of the juice industry as also the development of the Fruit and Vegetable processing industry.
Further, some states have also increased the VAT on carbonated soft drinks. Soft drinks industry is already reeling under margin pressure due to high rate of taxes it is already paying to the Central and State Governments. This increase in taxes will therefore have to be passed on to the consumer leading to an increase in the price of the soft drinks, which will restrict purchase of soft drinks by the general mass. This in turn will have a chain effect on the beverage industry and industries that depend on the beverage industry. An increase in price also favours spurious manufacturers to sell their products basis the cost arbitrage.
On the regulatory front, the industry expects that the food safety authorities remove roadblocks and provide much faster clearances and approvals on ingredients and new products, without compromising the safety and quality of new products. This is most relevant incase of proprietary foods where inordinate delays result in food and beverage companies having to wait for many months before launching new products.
The Indian Beverage Association also suggested that CODEX should be made a reference point for national food control agencies. The CODEX international food standards, guidelines and codes of practice contribute to the safety, quality and fairness of international food trade. Referencing to CODEX will help the Indian Beverage Industry contribute a higher share to global food and beverage trade, which is estimated at USD 200 billion dollar, globally.
According to Mr. Arvind Varma, Secretary General, Indian Beverage Association, “The non-alcoholic ready-to-drink beverage industry is one of the largest investors in the country and has contributed significantly to the growth of allied industries. This industry is witnessing robust growth, driven by a combination of factors such as increased investments and innovations. However, the government needs to take a long term view on the industry while formulating policies or else there is a chance this industry’s growth may get derailed. IBA aims to act as a catalyst to enable the non-alcoholic beverage industry to play an increasingly significant role in the growth of the economy, by providing employment opportunities and driving income growth and therefore has raised its expectations with the government authorities. ”
Industry players also felt that R&D prowess will be the ‘unlock’ to move beyond global brands and develop local, indigenous products to suit regional palates, thereby driving further growth in the market. These innovations are meant to address the low per-capita consumption of packaged beverages and will create both direct and indirect impact.
The Indian Beverage Association aims to bring together all stakeholders to a common platform to promote growth of the non-alcoholic beverage industry. As a forerunner in the sphere, it intends to act as a common voice for the industry and play an increasingly significant role in the growth of this sector, a sector that drives the economy by providing employment opportunities and driving income growth.
The Association serves as an inter-face between the industry, the government and the public, besides providing a unified and focused viewpoint on legislative and regulatory matters. IBA aims to facilitate the framing, development and dissemination of best practices related to the environment, quality, manufacturing and other relevant areas, with the objective of continuing the manufacture and supply of safe, healthy and high quality non-alcoholic beverages for the consumers.
The Association also aims to pro-actively interact with the Central and State Governments and other apex industry chambers for the formulation of policies and rules that may help promote and protect the interests of the non-alcoholic beverage industry in its endeavour to serve the nation.
The Indian Beverage Association comprises leading members of the beverage industry such as FieldFresh Foods (Del Monte), Red Bull India,
For further information, please contact: Arvind Varma, Secretary General, Indian Beverage Association at firstname.lastname@example.org