India's alcohol beverage exports set to surpass USD 1 bn soon

New Delhi: The country's alcoholic beverages exports are expected to cross USD 1 billion in the next few years on account of increasing demand for spirits in global markets, a senior government official said on Thursday.

As against the exports of USD 325 million in 2022-23, the outbound shipments from the sector touched USD 230 million during April-October this fiscal, Additional Secretary in the Commerce Ministry Rajesh Agrawal told reporters here.

The global trade of these products is about USD 130 billion.

"The demand for Indian spirits is increasing...It is expected to go beyond USD 1 billion in the next few years. Indian beverages market is growing very fast and slowly demand for these brands across the world is also picking up," Agrawal said, adding that in the forthcoming three-day Indus Food show in Greater Noida (Uttar Pradesh), there will be a wine and spirits section.

Over 2,500 global buyers, 5,000 domestic buyers, and 86 retail chains will be participating in the show apart from over 120 foreign exhibitors.

The world trade in the segment is being captured by Scotch (USD 13 billion).

When asked if free trade agreements of India will help promote these exports, he said, "This is also one of the areas where we are trying to negotiate upon...we are also trying to see the duty concessions that are required in various destinations, we get (that)".

The condition that for a product to qualify as a whisky, it must be matured for a period not less than three years has not yet been resolved.

The Indian industry claims that because of the warm climate in India, the product matures in one year and gives the same outcome.

"The debate is still on whether we should brand it as Indian whiskey or look for a scotch (brand)...International law in many countries prohibits that (one-year thing). It is an unresolved issue," he added.

According to the alcoholic beverages makers' body Confederation of Indian Alcoholic Beverage Companies (CIABC), it has been highlighted several times, along with scientific substantiations, that such long maturation is not applicable under a warm Indian climate.

"We believe that it is effectively a non-tariff barrier since long maturation increases the cost of Indian products by 30-40 percent as spirit evaporates 10-15 percent every year under Indian climate (compared to 1-2 percent in Europe)," CIABC Director General Vinod Giri has said.

He has also said that the cost of capital deployed during maturation in India is high (8-10 percent per annum) as compared to 2-3 percent for Europe.