India’s alcoholic beverages (AlcoBev) sector is at a critical inflection point. Having recorded a robust 13 per centCAGR over the past three years and poised for 8 - 10 per cent growth in FY26 - reaching an estimated Rs 5.3 lakh crore, the industry is no longer a silent contributor to the economy. With the Indian Made Foreign Liquor (IMFL) segment expected to grow by 5 - 6 per cent(464 million cases) and beer by 8 per cent(412 million cases), steady demand and premiumization are fuelling this upward trajectory. But to convert momentum into long-term, sustainable growth, the policy environment must evolve in sync with market realities.
The ENA Relief: A Step in the Right Direction
The removal of GST from Extra Neutral Alcohol (ENA) in 2024 marked a landmark reform. By lowering production costs for spirits, the move bolstered competitiveness for domestic producers, enabling them to challenge imports and penetrate new markets. It sent a strong signal that the government is willing to address structural bottlenecks. However, one policy change, even one as impactful as this, is not enough to transform the sector’s fortunes.
Taxation Reforms: The Cornerstone of Progress
India’s current tax framework for alcoholic beverages remains fragmented, with each state operating under its own excise policies, levies, and pricing controls - companies face high compliance costs and unpredictable operating environments. This patchwork not only increases compliance complexity but also discourages cross-border trade and investment. A possible solution lies in creating a nationally aligned taxation framework, one that standardizes pricing and tax structures while allowing states to retain fiscal autonomy through controlled cesses. This middle-ground approach could reduce administrative burdens for businesses while ensuring predictable and consistent revenue streams for governments.
Standardising taxation and price structures would be a win-win: reducing administrative burdens for companies, encouraging formalization, and increasing investor confidence in a sector that already contributes significantly to state exchequers.
Policy Meets Possibility: Global Ambitions
India’s AlcoBev makers have an untapped opportunity in the global market. Indian gins, rums, beers, and wines are already gaining recognition for their quality and craft. With the right policy support, exports could cross USD 1 billion by 2030.
However, achieving this requires more than just ambition. Streamlining export processes, ensuring compliance with international standards, and removing tariff barriers are essential steps. Reducing export barriers, streamlining label registrations, and aligning quality standards with global norms would allow Indian brands to scale internationally, enhancing both revenues and the country’s soft power. Indian brands can - and should - compete globally, but success will depend on marrying authenticity with cultural adaptation and regulatory diligence.
Bridging the Centre - State Divide
Longstanding operational challenges such as licensing delays, label registration complexities, price fixation mechanisms, and restrictive retail policies continue to hinder growth. Establishing a cohesive national framework for these processes would go a long way in improving the ease of doing business.
Such a framework could standardize core elements while allowing states to innovate in areas like responsible consumption campaigns, tourism-driven liquor experiences, and locally adapted retail models.
The Road Ahead
The ENA relief proved that targeted reforms can have a transformative impact. Now, it’s time for a holistic policy overhaul, one that unites fiscal stability, business ease, and global ambition. A targeted policy overhaul , encompassing tax harmonization, regulatory stability, and export-friendly frameworks, can transform India’s AlcoBev sector into a global growth story.
If the government and industry stakeholders can align on these priorities, India could not only consolidate its domestic leadership but also secure a prominent place on the world stage of premium alcoholic beverages. If India’s policymakers and industry leaders can work in tandem to streamline taxation, modernize regulations, and champion exports, the AlcoBev sector could emerge as a true economic growth engine, domestically vibrant and globally competitive.
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