Alcoholic drinks are widely consumed throughout the world. According to a World Health Organization report 2014 on alcohol and health, 38.3% of the world’s population was reported to consume alcohol regularly. An individual’s consumption of alcohol per year was 6.2 litres. This report showed that 30% of Indian population consumed alcohol regularly of which 11% Indians were moderate to heavy drinkers.
Consumption of alcoholic drinks by Indian consumers predates British colonization and has often been suppressed by taxes and other restrictive policies including banning of the sale of liquor on highways. India has the world’s fastest growing market for alcoholic drinks consumption. Restrictive policies such as high tax rates on alcoholic beverages at the federal and state levels are often carried out under that concern that alcoholic drinks should be heavily regulated in order to prevent public health & safety issues related to drinking. However, these policies have often proven to be ineffective for controlling drinking habits in India. And consumption of alcoholic drinks is still on the rise in the country.
Another report of World Health Organization shows that consumption of liquor in India has been growing steadily since 2005. While tariffs on imported liquor remain high, domestic liquor manufacturing and sales are also enmeshed in a complicated network of strict laws and regulations on both the federal & state levels, especially after Goods and Services Tax, which was implemented on 1 July 2017. Generally, two types of liquor exist in the Indian market – Indian Made Foreign Liquor (IMFL) and Imported Foreign Liquor (IFL).
Indian Made Foreign Liquor: This type of liquor is termed as hard liquor that has incorporated from imported raw materials or borrowed the concept from foreign branded liquor. Among all IMFL, whisky is imported into India the most. Despite its origins, freedom to purchase IMFL is largely restricted in some federal states. For instance, the southern states are often more heavily regulated in manufacturing of liquor and its distribution as compared to the northern states. The federal states use a licensing system to control the number of private bars.
Imported Foreign Liquor: This kind of liquor includes foreign produced liquor imported into India. It has a marginal share of the total alcohol consumption in India. Consumers of IFL are rich and upper middle class individuals or international travellers. Indian import duties on IFL are as high as 150% under GST regime. That is why India’s total liquor market is less than 3%. Despite high customs duties on this kind of liquor, imports of whisky have grown steadily over the years were primarily driven by purchases from licensed retailers & manufacturers and government agencies.
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