India’s booming alcohol-beverage industry, which is currently the fastest-growing market for alcoholic beverages globally, is facing immense regulatory complexity and compliance burdens, according to a report released by TeamLease Regtech, India’s leading regulatory technology solutions company.
The report, titled “Simplifying Compliance Management for the Alco-Beverage Industry,” highlights the challenges entrepreneurs and employers face in this industry and provides actionable recommendations for enterprises and policymakers.
With an estimated market size of $52.5 billion in 2020 and a projected compound annual growth rate (CAGR) of 6.8% over the next four years, India’s alcohol consumer base is set to reach 386 million people by the end of the decade. Factors such as rapid urbanization, changing social norms, and rising disposable incomes have contributed to the growing demand, particularly among the younger population.
However, the report reveals that enterprises in the alco-beverage industry are burdened with an extensive array of licenses and registrations. To set up a manufacturing facility from scratch, an enterprise needs a minimum of 99 licenses and registrations under the 67 Acts. While some licenses can be obtained within 15 days, the majority have no specific timeline for approval, resulting in a lengthy process that can take up to 3-4 years for an entrepreneur. Even after operations commence, enterprises must adhere to over 3,000 compliance obligations annually. These obligations include record maintenance, returns, and filings under various state excise policies and Acts such as the Food Safety & Standard Act, 2006, and State Liquor Licence Rules.
“The $50 billion alcohol-beverage industry contributes significantly to state tax revenues. With the industry poised for further growth, it is crucial to understand the challenges faced by entrepreneurs operating in this space,” says Sandeep Agrawal, Director and Co-Founder of TeamLease RegTech. “Our report delves deep into the ground realities of the alco-beverage industry and sheds light on the complex compliance landscape faced by enterprises in over 30 diverse markets across India.”
Compliance obligations vary depending on the enterprise’s position in the supply chain. Manufacturers require a minimum of 99 licenses and permissions, while warehouse operators need 8 licenses. Retail sellers, depending on whether they sell alco-beverages or serve them as part of a food business, can require anywhere from 9 to 13 licenses. Operating in just one state can subject an employer to over 3,000 yearly obligations, further exacerbating the compliance burden.
To add to the complexity, enterprises need to comply with state-specific acts, rules, and regulations, as well as central-level laws such as the Prevention of Food Adulteration Act, 1954, and the Food Safety Standards (Alcoholic Beverages) Regulations, 2018. The report highlights that an enterprise operating an alco-beverage manufacturing chain must comply with at least 986 unique compliance obligations, with 202 obligations requiring monthly compliance and 736 obligations needing annual compliance. Managing these obligations with traditional methods like Excel spreadsheets can be challenging and prone to errors.
The report concludes with recommendations for compliance reforms that can streamline the regulatory landscape and enhance the ease of doing business in the alcohol industry. By embracing new-age solutions for compliance management, such as advanced regulatory technology, enterprises can navigate the intricate web of regulations more efficiently and focus on growth and innovation.
