New Delhi, March 21, 2017

Beverages major awaits clarity on the impact of the tax on its business

Coca-Cola India would prefer the government to consider levy of GST on aerated drinks on the basis of sugar content.

With the GST Council announcing the cap on the cess to be charged on aerated beverages, Venkatesh Kini, President, Coca-Cola India and South-West Asia, hoped the government will eventually move to a differential tax structure based on sugar content in food products as is the case in countries such as Mexico. Many countries levy sugar tax on a range of products, including beverages, which is based on sugar content.

From a consumer and the public health perspective as well as the government revenue perspective, it would be great if the government taxed products based on sugar content, he said adding “I hope the government eventually moves in that direction. India is one of the largest consumers of sugar on a per capita basis and if one looks at the source of 99 per cent of this sugar consumed, it comes from products that we don’t sell.”

Asked about the impact on tax incidence for the company, he said, “We are awaiting clarity on this and the impact on our business is yet to be determined. But we are optimistic that the impact of GST rates will not be inflationary on Indian consumers.”

“Today, our juices and juice drink brands Maaza and Minute Maid are worth Rs.3,000 crore. I hope the government maintains the tax rate on juices. I hope they maintain the tax rates of bottled water as neutral and tax rates on dairy beverages are not increased. If the government will not increase taxes on these categories then overall the impact on our business should be neutral,” Kini added.

Price increase

Replying to a query on whether the company has worked out the price increase it may have to take on its products, Kini said, “There is a wide variation in taxes and prices in different parts of the country. GST will allow us to have a national price, what that national price ends up being will depend on cost structures. Overall, we believe it will positive for the country.”

[The Hindu Business Line]