'India’s non-alcoholic drinks market to reach Rs 1.47 trillion by 2030': Report

India's non-alcoholic beverages market is expected to grow to Rs 1.47 trillion by 2030 at a compound annual growth rate (CAGR) of 8.7 per cent, from around Rs 671 billion in 2019, the Indian Council for Research on International Economic Relations (Icrier) said in a detailed analysis.

More than 60% of the global market was made up of carbonated soft drinks (CSDs), ready-to-drink teas (RTDs), energy drinks, and sports drinks. The most popular beverages among Indians are carbonated beverages, bottled water, and fruit beverages and juices.

According to the report, the government should focus on increasing farmers' revenue through the use of fruit pulp/puree/juices, as well as look into taxation on fruit-based beverages and juices. To encourage the expansion of the Indian juice/beverage business and farmers, the paper proposes lowering the tax on fruit pulp/puree-based commodities from 12 percent to 5%.

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"While India is the world's greatest producer of numerous raw materials required in the production of non-alcoholic beverages, roughly 25-30 percent of the fruits and vegetables grown in the country are still lost in the supply chain," according to Deepak Mishra, director and chief executive of Icrier.

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“We are far behind other developing countries in exports of beverages. For example, in 2020, we were the 59th global exporter of fruit and vegetable juices, while Brazil ranked first. With the PLI scheme and other incentives, there is scope to enhance the domestic manufacturing capacity and exports.”

Nutrition-based taxes

Furthermore, the paper suggests that taxes in the Union Budget for 2023-24 be set in such a way that they encourage people to consume healthily. Nutritional taxes should be implemented.

Carbonated sugar-based drinks, for example, may be subject to the highest GST rate of 28%, but carbonated fruit juices with no added sugar or mineral water should be taxed at the lowest rate.

The FSSAI product regulations must be aligned with the product definitions in the GST tax slabs, as moderate taxation can lead to increased revenue collection, increased investment in R&D and product innovation, reduced supply chain wastages, increased farmer income, and India becoming one of the leading global beverage hubs.

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