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Juicing jobs for India

Non-Alcoholic Beverages Sector has Huge Potential to Create Jobs

With over 1.3 billion people and a majority in the working age group, creation of jobs is of utmost priority to the Centre and state governments in India. A recent study by the authors found that non-alcoholic beverages sector has a huge potential for job creation across the entire supply chain from manufacturing to logistics, retail, distribution and recycling. Based on an Input-Output model, the study estimated that for every INR 1 crore of output produced in the “non-alcoholic beverage sector”, a total of 8.9 additional direct and indirect jobs are created in the economy. The non-alcoholic beverages sector added INR 7,91,599 million value to the Indian economy and created an estimated 6,91,491 jobs in 2018-19. The labour to output ratio in this sector is 0.49, which means that to produce INR 1 crore of output around 5 people are directly employed in this sector. The study found that large companies in India, on an average, have employed 10,000-25,000 people.

Many of them have focused on women employment to meet the 2030 UN Sustainable Development Goals. Further, the training offered by companies to their contract manufacturers and other supply chain partners, on areas such as sales techniques, inventory management, market execution, quality and food safety standards, have helped to improve the skill levels and employability of the workforce.

Job Creation in India is Below Potential

Yet, the contribution of the non-alcoholic beverages sector to the total employment in India is only 0.06 %. Examples of other countries show that the sector contributes significantly to employment creation. For example, in Indonesia, the number of workers in the large and medium-sized beverage manufacturing industry increased from 51.63 thousand in 2013 to 94.41 thousand in 2019. In Mexico, the total number of workers engaged in the production of beverages increased from 114829 in 2013 to 124035 in 2019. In the USA over 252,900 people were directly employed in this sector in 2013; which increased to 265,122 in 2022. Given that this sector is labour intensive, there is huge potential for job creation in India as well.

Creation of jobs is closely related to the contribution of this sector to manufacturing, domestic and foreign investment and exports. The contribution of the non-alcoholic beverages sector to India’s manufacturing, foreign investment and exports are much lower than the contribution of the sector in ASEAN countries or China. Foreign investment inflows are below one per cent and exports are much behind what is required for India to become a USD17 trillion economy by 2047. This is despite India having a natural advantage in beverage processing by being one of the largest producers of raw materials such as banana, mangoes, lime milk and sugar. India also offers a large and growing market for beverages companies where consumers are ready to experiment with a wide variety of products. The government has come up with schemes like Production Linked Incentive (PLI) scheme and policies like One District One Product to support the growth of beverages manufacturing in India. Yet, the investment in manufacturing is low. This is because of hurdles such as high rates of GST (of around 40% on fizzy drinks irrespective of the sugar content), multilayered regulatory requirements and infrastructure gaps, which may be slowing down the growth of manufacturing and job creation. Unfair competition from the informal sector have also restricted the growth of the formal sector. High rates of GST has been a deterrent to growth of food processing in general in India, especially when the informal sector does not pay taxes and the GST rates are much higher in India than that of the competing countries.

Government and Companies Need to Partner to Create Jobs

It is well-known that beverages processing will help reduce the wastage in the supply chain and enable to increase farmers’ income, create jobs, and enhance investment in manufacturing. Given these benefits, the government at the Centre and states may work closely with the non-alcoholic beverages industry to focus on growth and job creation. It is now time to explore how beverage companies can partner with the government to develop India as a manufacturing hub and create quality employment. States need to provide a supporting environment for investment by improving ease of doing business and removing regulatory hurdles; while Centre can have a nutrition-based taxation on final product and lower taxes on raw materials and intermediate goods imports for supporting “Make in India”. Policies should encourage innovation and product diversification, which will widen the offering to customers, which in turn, will create upstream and down steam employment.

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Views expressed above are the author’s own.

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