India’s alcoholic beverage market is poised for continued growth over the next few years, but what consumers choose to drink could matter as much as how much they consume, Sanjit Padhi, chief executive of the International Spirits and Wines Association of India (ISWAI), said in an interview with Mint. Rising incomes and premiumization are projected to drive up market value, though a shift toward lower-value categories like beer could pull in the opposite direction, he added. Realizing these value gains will also depend on navigating rigid state-level pricing controls, which continue to restrict companies from adjusting retail prices freely.
Domestic manufacturers face other headwinds—ranging from tighter label scrutiny to lower import duties on foreign liquor introduced this year—that could also temper expansion. The next growth phase is also being shaped by inflation and higher taxation, he said.
Padhi expects the market to broadly track nominal gross domestic product () growth in 2026, with value expanding faster than the broader economy. Volume growth is projected at a more moderate 4% or so annually through 2030, leaving the revenue trajectory dependent on the mix between beer and spirits.
ISWAI, which represents major players such as Bacardi, Brown-Forman, Campari Group, Diageo India, Edrington, Jägermeister, and John Distilleries, estimates the domestic market reached ₹6.18 trillion in calendar year 2025, up from ₹3.9 trillion in 2021. Spirits and ready-to-drink beverages accounted for nearly ₹4.2 trillion of the 2025 total.
Industry value and tax revenue
In a new report titled ‘Economic value of the Indian Alcoholic Beverage Industry’, co-authored with EY, ISWAI pegs the market value at about 1.8% of India’s nominal GDP and estimates alcohol-related tax collections at ₹4 trillion in FY25. Clarifying that this measures market value rather than direct GDP contribution, Padhi said, “The industry is not insignificant. It needs to be recognized as a strong contributor to states’ tax revenue.”
The report estimated the overall FY25 market at ₹4.16 trillion for spirits and ₹93,500 crore for beer, while country liquor accounted for about ₹1.05 trillion (in CY25). It also estimated that 14-19% of organised food-service revenue is linked to alcohol-related demand.
According to Padhi, alcohol-related taxes accounted for 6.6% of India’s total tax collections, 11.3% of indirect tax revenues, and 19.1% of states’ own-tax revenues in FY25, with several states exceeding 20%. Telangana led state reliance on alcohol revenue at 32%, followed by Tamil Nadu at 27% and Uttar Pradesh at 25%.
However, this high dependence has not led to a uniform regulatory approach. States vary widely on taxation, licensing, price approvals, distribution, and compliance—creating what Padhi described as a “mismatch between the economic importance of the sector and how it is regulated”.
prices in India are set independently by individual state governments rather than through a single national formula, with several states tightly restricting price increases. Padhi dismissed concerns that greater pricing flexibility would trigger automatic price hikes. “State governments should give pricing freedom to alcohol companies as in markets where such freedom has been provided, companies have not necessarily increased prices,” Padhi told Mint.
The industry is also pushing for a more uniform approach to different alcohol categories. Referring to measures in states such as Karnataka that favour lower-alcohol categories such as beer and ready-to-drink beverages, Padhi said policy should not be designed around individual categories. “States should also adopt a category-neutral approach rather than favouring one category over another, whether spirits or beer,” he said.
FSSAI clampdown
Scrutiny by the Food Safety and Standards Authority of India (FSSAI) in July and August focused on whether alcohol labels accurately describe bottle contents. The regulator took action over added flavours, age claims, and descriptions of blended spirits, questioning a ‘7 years old blended’ claim on Old Monk rum and a “matured in American oak casks” claim on Diageo’s Royal Challenge whisky. The FSSAI clarified that it was not calling for a blanket ban on flavouring, but rather objecting to the use of flavours to mimic the traits of standard spirits, and labels that fail to disclose a product’s true nature or age. While affected companies challenged the order, they have now been given until the end of December to self-comply with updated labels.
Padhi noted that these changes should not materially impact industry volumes or economics, as companies mainly need to correct label copy and ensure age and maturation claims accurately reflect the product.
UK FTA Impact
The implementation of the on 15 July this year directly slashed import duties on British goods such as Scotch whisky and premium vehicles, triggering a 7-10% drop in retail prices depending on state excise structures.
For the alcoholic beverage industry, lower tariffs are expected to reduce prices on imported spirits, though Padhi noted that initial cuts may not be substantial enough to shift mass consumer behavior. Instead, he expects the primary impact to unfold in the premium segment and through lower costs for imported inputs, giving Indian manufacturers greater flexibility to improve products or compete on price.