Contribution of Non-alcoholic Beverage Sector to Indian Economic Growth and Atmanirbhar Bharat

Food Processing will be a key sector in meeting India’s goal of achieving inclusive growth as the country sets its vision for Amrit Kaal – India @2047. Non-alcoholic beverages are a key component of the food processing sector and the growth of this sector can make all its stakeholders, from farmers to small and medium producers, supply chain agents and consumers, a part of India’s successful growth story. India is the largest global producer of several raw materials used in manufacturing non-alcoholic beverages. Today, around 25 to 30 per cent of fruits and vegetables produced in the country are wasted in the supply chain. Beverage processing can help reduce this wastage, as it has in several other countries. The government has introduced schemes like Mega Food Parks and Production Linked Incentive Scheme and several start-ups with innovative products have come up in the non-alcoholic beverages sector. Yet, domestic production is below potential and that of other developing countries in the ASEAN region, and exports are low. This report aims to understand the contribution of the non-alcoholic beverage sector towards the Indian economy, examine its strengths and best practices, identify challenges and suggest a way forward to make India one of the world’s leading beverage processing hubs. The report is based on a review of global policies and best practices, secondary data and information analysis, and a primary survey of different supply chain agents, including farmers, companies, contract manufacturers and logistics providers.The report for the first time brings forward a detailed study of the tax regimes of different countries and India’s own GST regime to understand how taxes can impact the growth of the sector. Global studies show that high taxation, in the absence of complementary reforms, will not lead to positive health outcomes and can be regressive, with the tax burden falling disproportionately on lower income groups. It could also inhibit growth, innovation and investment. At the same time, moderate taxation can achieve revenue targets as well as other government objectives related to positive health outcomes, growth of food processing, investment in manufacturing and farmers’ welfare. However, few studies have looked at the effects of taxation on the non-alcoholic beverage sector in India and policies are often not driven by research and evidence. This report aims to address this lacuna. The report will help policymakers design the right policies, based on data and evidence, and align policies across different government agencies/ministries/departments. It identifies areas where industry and government can collaborate, which is a core area of the UN Sustainable Development Goal-17. It provides the academics and researchers with a comprehensive overview of the sector and the industry with an overview of the Indian market, and aims to foster debate and discussion on how India can become a world beverage processing hub. Read more