European Beverage Giants Urge India to Suspend 10% Import Duty on Bottles Amid Supply Crisis

European alcoholic beverage companies are urging the Indian government to temporarily remove a 10% import duty on glass bottles and aluminum cans, citing growing concerns over shortages and rising costs. The request comes as the ongoing conflict in the Middle East disrupts supply chains, particularly for packaging materials essential to the alcohol industry.

The Federation of European Business in India, which represents major international brands such as Pernod Ricard, Anheuser-Busch InBev, Heineken, and Carlsberg, sent a letter to Indian authorities on April 2. The group warned that local manufacturers of bottles and cans are unable to operate at full capacity due to energy shortages and supply disruptions linked to the war. This has led to constrained supplies for beverage producers operating in India’s $65 billion alcohol market.

Industry data shows that costs for glass bottles, cartons, and labels have increased sharply since the start of the crisis. The Brewers Association of India reported that glass bottle prices have risen by about 20%, while overall production costs for alcohol companies have climbed by up to 15% due to higher prices for raw materials like adhesives and packaging. The association also noted that sourcing bottles and cans from alternative suppliers outside India could increase costs by as much as 30%.

Passing these higher costs on to consumers is difficult in India. In nearly two-thirds of the country’s 28 states, any change in retail alcohol prices requires government approval. This regulatory environment limits how quickly companies can respond to cost pressures.

The Brewers Association of India has also appealed to the government for relief from import duties on packaging materials. The group emphasized that supply disruptions have already reduced the availability of bottles and cans, forcing companies to consider imports from Southeast Asian countries. Vinod Giri, director general of the association, said that without imports, beer producers may not be able to meet domestic demand starting as early as May.

The situation is further complicated by currency fluctuations. The fall in the value of the Indian rupee has made imported packaging even more expensive for local companies. At the same time, international prices for glass and aluminum have risen due to global supply chain disruptions.

India’s reliance on gas for industrial use has added another layer of difficulty. Factories producing glass bottles depend heavily on liquefied natural gas (LNG), but recent data shows that LNG imports dropped to their lowest level since January 2025. The government announced this week that it will allocate only 70% of pre-crisis levels of liquefied petroleum gas supplies to select commercial users, including some factories.

Despite a recent two-week ceasefire agreement between the United States and Iran, shipping through key routes such as the Strait of Hormuz remains restricted. This ongoing disruption continues to affect deliveries of raw materials needed by Indian manufacturers.

Neither India’s commerce nor finance ministries responded to requests for comment regarding the industry’s appeal. The Federation of European Business in India also declined to comment further on its letter.

India’s alcohol market is one of the fastest growing in the world, with an expected annual growth rate close to 8% until 2033 according to Coherent Market Insights. Heineken currently holds the largest share in India’s beer sector, while Diageo and Pernod Ricard lead in spirits by volume.

Industry representatives warn that if shortages persist or worsen, there could be broader economic consequences. The Brewers Association of India estimates that beer producers alone contribute $5.52 billion annually in taxes. Any significant disruption in supply could impact government revenues at both state and national levels.

As companies continue to monitor developments in global trade routes and energy supplies, they are preparing contingency plans that include importing packaging from new sources despite higher costs. However, industry leaders stress that without temporary relief from import duties or improved domestic production conditions, shortages may become unavoidable in the coming months.