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Indian Alco-Bev Startups: Crisis Deepens Amid MSME Shutdowns and Regulatory Barriers
The Indian alco-bev startup ecosystem is grappling with serious systemic challenges, as a surge in MSME closures threatens its foundation. Data from the fiscal year 2024–25 reveals that over 35,567 MSMEs have shut shop, contributing to a total of 75,000+ closures since the pandemic. For the burgeoning alco-bev sector, these figures reflect a troubling reality.
Fee Disparity Hits Domestic Brands Hard
Domestic alco-bev brands, particularly those categorized as Indian Made Foreign Liquor (IMFL), face disproportionately higher entry costs compared to Bottled in Origin (BIO) imports. For example:
- Maharashtra:
- IMFL gin brand: ₹14,60,000/year
- BIO gin brand: ₹6,250/year
This nearly 198% disparity restricts innovation and accessibility for homegrown startups. Industry voices are urging reforms such as:
- Equalizing IMFL and BIO fee structures
- Lower registration costs for DPIIT-recognized startups
Rakshay Dhariwal, Founder of Maya Pistola Agavepura, said:
“A one-size-fits-all model hurts craft spirits. If India wants its alco-bev brands to compete globally, it must first support them domestically with fair and accessible policies.”
Distillery Costs Discourage Manufacturing
Startups in this space also struggle with the high cost of distillery setup, which ranges from ₹50 lakh to ₹2 crore annually. Most are pushed towards:
- Contract manufacturing
- Import dependency
Only Goa offers some relief, where a bottling license can be obtained for ₹10 lakh per year without a separate distillery fee. Stakeholders argue that adopting similar policies nationwide could spur more local production and entrepreneurship.
Innovation Curtailed by Packaging Restrictions
Packaging is an area where innovation thrives—except for Indian brands under current laws. IMFL brands in many states are banned from using materials like stainless steel, clay, or aluminum, while imported BIO brands are permitted.
Mayukh Hazarika, CEO of Cherrapunji Eastern Craft Gin, stated:
“By limiting packaging choices for Indian brands and allowing more for imports, we’re actively stifling innovation and undermining local entrepreneurship.”
A Need for Startup-Friendly Excise Policies
The crisis calls for urgent and holistic policy interventions, including:
- A unified excise policy with startup-specific benefits
- Lower excise fees and simplified label registration for IMFL
- Single-window clearances across state authorities
Such initiatives would not only rejuvenate the alco-bev ecosystem but also position Indian craft spirits as serious players on the global map.
What Lies Ahead
As the industry waits for concrete reforms, the message is clear: without policy-level support, innovation will stagnate and closures will continue. With over 35,000 MSMEs lost in a year, the fate of many alco-bev startups now hinges on whether states can align incentives with the aspirations of a new generation of Indian entrepreneurs.
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