SAA 25-THINKPAD 2: How Regulation Shapes Alcobev Expansion in India?

India’s alcobev sector stands at a critical inflection point, poised for remarkable growth yet constrained by one of the most intricate regulatory frameworks in the world. To unpack this complex intersection of governance, taxation and enterprise, the ThinkPad session titled ‘License to Grow: How Regulation Shapes Alcobev Expansion in India?’ brought together leading voices from government and industry for a high-level dialogue on charting a progressive path forward.

Moderated by Sanjeev Vijh, Vice President – Corporate Affairs, Diageo India, the session assembled a distinguished panel comprising Devesh Deval, Joint Secretary, Ministry of Food Processing Industries (MoFPI) and head of its Alcobev Committee; Anant S. Iyer, Director General, CIABC; Ashutosh Rajput, Chief Operating Officer at Alcobrew Distilleries India Ltd.; Prarrthona Pal Chowdhury, Head of Regulatory Affairs at Moët Hennessy India; and Rajnish Singh, Founder of YAANA Advisors. The panel explored the possible frameworks of policy harmonization between central and state, and the growing call for a “One India, One Market” approach to make India a competitive global alcobev hub. 

By VIKAL Samdariya

Opening the discussion, Sanjeev Vijh underscored the economic significance of India’s alcoholic beverage sector, noting that it contributes nearly two percent to national GDP. Setting a policy-focused tone, he invited Devesh Deval to outline MoFPI’s strategic vision for the sector.

A seasoned bureaucrat with a forward-looking approach, Devesh began by emphasising the ministry’s evolving outlook. ‘We look at the industry not just as policymakers but as learners, understanding from the sector what is happening on the ground,’ he said, signalling the government’s intent to engage closely with industry realities.

Drawing attention to India’s vast agricultural potential, he articulated MoFPI’s vision to translate that strength into global leadership in food processing, with the alcobev sector as an essential pillar. “India as a country should focus and bring this sector up,” urged Devesh, noting that currently only 10–12 percent of agricultural produce undergoes processing which must increase through value addition, investment and employment generation.

Describing the alcobev sector as “selfcapable and promising”, Devesh cited demographic shifts, urbanisation, rising incomes and digital penetration as key growth enablers. “We are very hopeful that the sector is going to rise in the times to come. For the Ministry of Food Processing, it is a great responsibility to nurture this potential,” he said

Offering a candid insider’s view of governance, he explained, “In government, decisions are always collective. Alcohol is an emotive issue; different ministries view it differently. But our advantage at MoFPI is that we look at it objectively, in terms of the contribution it makes.”

Through inter-ministerial coordination and structured policy mechanisms, MoFPI, he added, aims to ensure that the alcobeverage sector finds its rightful place within India’s food processing and economic growth framework.

Need for Policy Harmony

Taking the discussion forward, Anant S. Iyer addressed the absence of a harmonised regulatory and taxation framework across India. Despite being one of the country’s largest revenue contributors, he said, the industry operates under a fragmented regime owing to its status as a state subject and its exclusion from the GST framework. 

“Today, our industry contributes around ₹3.5–4 lakh crore annually in taxes collected by states. If India truly aims to be Viksit Bharat, this figure needs to triple and for that, we need harmonisation of excise policies across states,” asserted Anant, who is also an alcobev industry veteran.

He clarified that the industry is not seeking centralisation but rather policy stability and predictability. “Predictability brings trust, and trust brings investment. No investor will commit ₹100 or ₹200 crore without policy stability,” he said.

Citing Uttar Pradesh as a model, he noted how a steady excise policy helped the state’s revenues rise from ₹18,000 crore to ₹53,000 crore in a few years. He called for standardising key processes such as manufacturing, bottling and maturation across states to reduce inefficiencies and arbitrage.

Turning to the hospitality sector, Anant criticised the complex web of licences that undermines India’s easeof-doing-business narrative. “In my 33 years in this industry, I haven’t seen ease of doing business; only roadblocks after roadblocks,” he remarked candidly.

Highlighting inefficiencies caused by inter-state pass fees, he questioned, “We are one country, so why should there be such barriers?” Yet he praised the sector’s resilience in navigating these challenges. “For the industry to have survived under 31 state and four union territory regimes is remarkable. It shows the tenacity of those who’ve invested in it.”

Simplifying Compliance

Prarrthona Pal Chowdhury offered the premium and imported brands perspective, highlighting how fragmented state policies impede growth in the luxury wines and spirits segment. While premium brands sometimes face fewer obstacles than domestic producers, import-related and compliance challenges are significant.

“We often receive good support from progressive states like West Bengal or Maharashtra,” she remarked appreciatively, but identified stringent FSSAI labelling norms as a major concern for premium international brands.

“When we have to tell our global brand owners that the front label must carry 50 percent statutory warnings, it becomes very difficult. Most premium brands do not have a front label as such,’ she explained, underscoring the tension between global brand aesthetics and domestic labelling mandates.

Prarrthona urged greater ease of doing business, particularly within FSSAI and customs frameworks to enable smoother market access for premium products. She acknowledged regulators’ receptiveness and urged continued pragmatic, coordinated reforms that align India’s premium alcobev market with international standards and best practices.

A Unified Policy Vision

Returning to the conversation on policy reform, Anant outlined the need for a more unified national structure for the industry. He emphasised that aligning state excise policies and streamlining processes are essential to realise a ‘One India, One Market’ framework.

“We have submitted to the Ministry of Food Processing Industries a detailed proposal on harmonising excise policies,” he said. While excise remains a state subject, MoFPI could play a pivotal role by convening excise commissioners and secretaries to discuss alignment opportunities. He suggested beginning with a few states to demonstrate the benefits of collaboration. “Even if we start with 10 or 12 states under aligned leadership, it can set the ball rolling. It might take a decade, but what matters is taking the first step,” he remarked, proposing formation of a working group on excise harmonisation to institutionalise dialogue and track progress.

The MoFPI Joint Secretary acknowledged the complexity of harmonisation within India’s federal polity but reaffirmed that incremental progress was achievable. “It’s remarkable that the sector continues to thrive despite such diversity,” he observed.

He pointed to recent efforts in the export segment such as rationalising labelling norms and export policies as practical entry points for broader reform. “Once these reforms take shape, we’ll engage states one by one to demonstrate how model excise policies can enhance manufacturing and revenue,” he said.

Assuring the industry of MoFPI’s proactive stance on FSSAI and customs issues, he urged stakeholders to formally submit their concerns to the ministry for resolution. “If there are issues with FSSAI, bring them to us in writing. We’ll examine them thoroughly and take them to their logical conclusion,” he affirmed.

Citing recent achievements of the ministry, Devesh noted MoFPI’s success in simplifying FSSAI product approvals by eliminating redundant steps for products made from approved ingredients, and ongoing efforts to finalise balanced front-of-pack labelling norms.

Looking ahead, Devesh proposed creating a national dialogue platform, akin to the GST Council, to bring together excise ministers and commissioners for structured deliberation. “Many regulatory hurdles persist due to inertia. Once states focus on them, solutions will emerge,” he added.

Commending the ministry’s openness and responsiveness, Sanjeev said, “It’s heartening to know that there is now a parent ministry within the Government of India where our sector’s issues are being understood and addressed in a structured way.”

Decoding Regulation

Bringing the perspective of an insiderturned-advisor, Rajnish Singh reflected on the evolving relationship between government and the alcobev industry, noting that regulatory attitudes have become far more constructive in recent years. “The very fact that the Ministry of Food Processing’s Joint Secretary is on this panel is proof of the growing support from the government side,” he observed.

However, pointing to a legal standing, he said alcoholic beverages operate under a privilege granted by the state through licensing rather than as an inherent right. This distinction explains much of the regulatory complexity and underscores the need to balance business freedom with state control.

Describing licensing as “two sides of the same coin,” Rajnish explained that while the state grants the licence to operate, companies must earn their own licence to adapt and evolve. On the state’s side, he advocated simplification and harmonisation of taxation and excise systems through a model excise policy, which would not only promote ease of doing business but also enhance consumer welfare and state revenues by curbing illicit trade and inter-state arbitrage.

Turning the lens inward, he urged industry players to develop “regulatory agility,” the ability to stay compliant while remaining adaptive. “Simplify processes, ensure full compliance and if necessary, strengthen your corporate affairs capability,” he advised.

Concluding on a note of cautious optimism, Rajnish emphasised that genuine progress would depend on both policy reform and industry readiness. “Simplification and harmonisation are not just about ease of doing business,” he said. “They’re about building a balanced ecosystem where growth, compliance and consumer protection coexist.”

Unlocking Growth

Continuing the discussion on reforms and growth, the focus shifted to retail expansion. Highlighting India’s low retail density, roughly five outlets per one lakh population, compared to China’s six million points of sale, Sanjeev asked Ashutosh Rajput whether online retail and home delivery could redefine the sector’s future.

Though Ashutosh acknowledged the opportunity, he warned that structural constraints remain. “During the Covid period, a few governments started home delivery. But the bigger challenge is the rigidity in licensing and the fixed margins across the value chain. Without flexibility and a unified route to market, home delivery will remain a distant dream.”

Only a few states, such as West Bengal and Odisha, have experimented with home delivery, and even there it remains largely confined to premium products.

Turning to another persistent challenge, Ashutosh highlighted the difficulty of brand building in a “dark industry”, where direct advertising remains prohibited. “We have relied on brand extensions and surrogate advertising for years,” he said. “But even that space is tightening, with ASCI [Advertising Standards Council of India] and the Department of Consumer Affairs enforcing stricter norms.”

Despite constraints, the sector has shown resilience. Drawing on IWSR data, Ashutosh observed “between 2019 and now, we’ve added nearly eight crore cases, all without advertising.” India sells over 42 crore cases of IMFL annually, amounting to roughly 360 crore bottles of 750 ml each.

However, two-thirds of whisky sales are still dominated by 10 legacy brands built in the pre-ban advertising era. “In the last two years, nearly a hundred new brands have launched, but the playing field remains uneven. With tighter ASCI codes, limited in-store visibility, and stricter social-media norms, new brands struggle to compete,” he explained. He argued that modernising the 1995 Cable Television Act, which prohibits alcohol advertising, would be necessary to give new brands room to compete.

The Path Ahead

As the session drew to a close, Sanjeev invited the panellists to “don the regulator’s hat” and propose strategic reforms that could unlock growth for India’s alcobev sector over the next decade.

Opening the round, Rajnish recommended standardising nomenclature for duties and taxes across states. “Excise departments can set their own rates, but at least the terminology should be the same,” he suggested, calling consistency a foundation for reform.

Anant underlined the need for a predictable revenue system that encourages investment and expansion and suggested collaboration with state tourism departments to strengthen the retail and hospitality ecosystem. “If tourist destinations, F&B outlets, hotels and MICE facilities operate in a predictable space, it will attract investment across the value chain, from ethanol to malt spirits, breweries and wineries.”

Ashutosh advocated for a unified route-to-market and tax framework, similar to those governing other FMCG sectors. That’s what I would wish for if I had a magic wand,” he remarked, pointing out that fragmented state policies continue to hinder efficiency and scalability.

From a premium-segment perspective, Prarrthona stressed the untapped potential of online retail and home delivery. “Before Covid, it was unimaginable. But states like West Bengal have successfully implemented models with Spencer’s and Swiggy. The templates exist; now we need regulatory adaptation,” she said, noting that better digital integration could bridge retail gaps and expand access.

Rajnish also urged pricing freedom and greater responsiveness to inflationary pressures. “There are still restrictions on pricing wines and spirits. Regulators need to be more understanding when inflationary pressures rise.”

Responding to these points, Devesh outlined a “whole of government” approach to support the sector’s growth. He reaffirmed India’s ambition to scale alcobev exports from approximately ₹2,200 crore to USD 1 billion by 2030, describing the goal as challenging but achievable. “We feel emboldened to set such ambitious targets because the industry has performed well and earned global recognition,” he said

Devesh highlighted MoFPI’s ongoing initiatives to enhance predictability, digital integration and ease of doing business. These include state-level excise reforms, a proposed digital licensing platform for seamless registration and payments, and a commitment by FSSAI to limit regulatory changes to once a year to enhance predictability.

He also discussed plans to link Indian cuisine, tourism and beverages as part of a broader “Brand India” narrative. “We can leverage the global popularity of Indian cuisine to take our food and beverage products abroad,” he said, while emphasising the need to maintain high-quality standards to sustain international credibility.

The bureaucrat reaffirmed the government’s collaborative approach. “We’re working closely with APEDA and the Ministry of Commerce to promote Indian alcobev brands in international fairs and expand budgets for marketing and visibility. It’s a work in progress, but we believe that with continued industry partnership, we can make it happen.”

During the open-floor interaction, a suggestion made by Gianander Dua, Director-Hops Marketing, to introduce a uniform legal drinking age across India found broad support. Devesh acknowledged it as both valid and achievable. “It doesn’t affect state revenues, and it reflects modern thinking. With proper dialogue and consensus, a unified legal drinking age is certainly possible,” he affirmed.

The session ended on a note of constructive optimism, reflecting a rare alignment between industry aspirations and government intent. While the road to reform remains complex, the discussions underscored a shared vision, one where policy harmony, predictability, and innovation together power India’s alcobev industry toward sustainable growth and global competitiveness.