microbrewery

This article is written by Vrinda Nigam, a student of Amity Law School, explaining the requirements for opening a microbrewery in India.image

INTRODUCTION

Most Indians are not really beer dipsomaniacs, they like their hard liquor more. But for those who are, nothing beats the freshly ‘crafted’ beer served at microbreweries. Sadly the prevalence of the culture of microbreweries is not much popular in India majorly because of challenges such as stringent state liquor laws, licensing issues, restriction of funds and lack of skilled labour for the highly technical job of brewing.

MICROBREWERY

A microbrewery or craft brewery is a brewery that produces a small amount of beer. Exact definitions vary, but the terms are typically applied to breweries that are much smaller than large-scale corporate breweries and are independently owned. Such breweries are generally characterized by their emphasis on quality, flavor and brewing technique.

The market for microbreweries is still developing. Today, only 4-5 states have established microbreweries that are essentially resto-bars where one can consume fresh-off-the-tap beer that has been brewed in-house. These microbreweries produce between 5,000 and 50,000 litres of beer, a day. It takes about seven hours to brew each variety of beer using imported ingredients. None of it is bottled and there are no preservatives added in the process. Those who tasted the full-bodied beer offered at microbreweries abroad were left craving for freshly brewed stuff. A few decided to take matters into their hands, and set up their own microbreweries here in India. According to industry estimates, the market for such finely crafted beers currently ranges between Rs75 crore to Rs 125 crore microbeweries and it takes about Rs 6 crore on an average to set up a microbrewery., it takes about seven hours to brew each variety of beer using imported ingredients.

With liquor being a state subject, microbrewery operators have to obtain a separate licence from the excise department which is a very strenuous task to say the least. To make matters worse, there are only a handful of states such as Haryana , Karnataka and Maharashtra, Punjab and West Bengal that give out microbrewery licences.

THE LEGALITIES

Excise, License, tax, duty & other legal requirements:

https://lawsikho.com/course/diploma-entrepreneurship-administration-business-laws
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Up till now we only have 3-4 Indian states with complete excise policy, but Maharashtra and Haryana were the first ones in this field. Excise policies deal with any kind of narcotics or intoxicants in alcohol/liquor industry, for which they levy taxes on the production based on fixed set of standards and guidelines. Generally this is done on per bulk liter for packaged beer in cartons and for microbreweries where there is no packaging involved. These taxes are put over the weekly or monthly production and also depend on the alcohol by volume (ABV), which is fixed for a tax rate and goes up with increase in ABV, but generally ABV in beers in microbreweries is not allowed over 8%.

A microbrewery or a brewpub license is issued by the state excise government which allows the company to start operations in its microbrewery for commercial use. Earlier the price for this license was over around Rs. 10 lacs/ year which was similar to the normal commercial large scale breweries, however due to recent developments it has gone to as much as Rs. 25,000/ year. But these figures may vary from state to state, because the excise regulations are state regulated and not centralized. An average of Rs. I -2 lac/ year should be taken in to account while planning the investment of the project.

If the microbrewer aspires to outset a pub in the premise, he needs to apply for a separate bar license, so that it follows the established state regulations of the respected state where he wants to establish the brewery.

Importing fabrication equipments from a different state in India involves some excise over the stainless steel used and in case the equipments are imported from china, or some European countries, a custom duty will be levied upon the goods from 10-30% of the total purchase, depending on the nature of equipments, the shipment location and their use. In case of imported raw materials an excise also need to be paid for them along with the customs duty for the nature of materials that are used in the production of alcohol.

Other licenses required for the setup:

  1. Commercial Electricity line
  2. Commercial water line- Municipality/ under ground bore water
  3. Land registration/ Lease sanction
  4. Company registration
  5. Waste water disposal certificate from pollution control board
  6. Fabricated equipment quality certificate from third party inspection (loyds, SGS, etc.)
  7. Water quality testing certificate from quality control labs (SGS, etc.)
  8. Quality Control (QC) certificate of finished beer from govt. approved QC labs, on random inspection basis.

EXCISE POLICIES OF DIFFERENT STATES:

WEST BENGAL (came to force in 2007)

The rules laid down by the Excise Department of West Bengal are as follows:

Rule 79 provides that

“(1) Breweries may be established for manufacture of beer for—

(a) sale within West Bengal by wholesale;

(b) export outside West Bengal;

(c) supply out of India; and

(d) for all or any of the above purposes.’

Rule 80 provides that, “Any person desiring to obtain license to work a brewery or a micro-brewery in any place in West Bengal shall apply in writing to the Excise Commissioner with receipted original Challan showing deposit of a non-refundable application fee of Rs. 50,000/- for a brewery and Rs. 25,000/- for a micro-brewery. The provisions of rules 4 and 6 shall apply mutatis mutandis to such application for license.” in case of micro-brewery the fees as aforesaid shall be at the rate of Re.0.10 per bulk litre subject to a minimum of Rs. 30,000/-“

HARYANA

Haryana excise department provided for the following rules of microbrewery projects in clause 9.10 of the “Excise Policy for the year 2013-14 & 2014-15”

L-10C LICENSE FOR PROMOTION OF MICROBREWERY PROJECT: In order to promote healthy drinking habit of liquor with low alcoholic content a license in form L-10C is granted for retail and sale of beer to be manufactured by Microbrewery Project. The license shall be granted to holders of L-4 license which deals with ‘Retail vend of foreign liquor in a Restaurant’ and L-5 license which deals with ‘Retail vend of foreign liquor in a bar attached to a restaurant’ on payment of Annual License Fee of Rs. 2.50 Lac. The excise duty shall be charged on the basis of its daily installed capacity @ Rs 18 per Bulk Litre (BL).

KARNATAKA (came in force in 2010)

In 2010, it was one of the first states in the country to come up with corresponding rules and policies. The city now has only four microbreweries. The Karnataka Brewery Rules, 1967 was amended to allow bars, clubs and hotels to open microbreweries. Apart from a one-time permit fee of Rs 2.5 lakh, microbreweries are required to pay excise duty of Rs. 17.5 per litre. The excise department imposed a flat tax on 50 per cent of the installed. The Rules also specify that the minimum space between the floor and ceiling of the microbrewery should be 14 feet.

Excise minister MP Renukacharya said that micro-breweries were very popular in foreign countries as people preferred to savour fresh beer. “Bangalore is a fast developing global city, attracting huge visitors from abroad. Keeping these factors in mind we have decided to give micro-brewery licences for Bars (CL-9) Clubs (CL-4) Lodges and Hotels (CL-7) and Star Hotels (CL-6A),” he said.

MAHARASHTRA

For a microbrewery manufacturing upto two lakh litres of beer per

year a licence in FORM BRL shall be granted. the BRL licensee manufacturing beer upto two lakh litres per year in a microbrewery, shall be allowed to sell the beer manufactured in an unbottled and

unpackaged form in the premises.

To know more about the Maharashtra’s state excise policies you may refer to: https://stateexcise.maharashtra.gov.in/Pdf/Maharashtra_Excise_Manual_Vol-I.pdf.

CONCLUSION

Microbrewery in India is not a prevalent culture though, but people are gradually developing their taste towards freshly made crafted beer. Earlier, not much was known about beer as its market in India was not really expanded. As the time is passing by, people are acquiring more awareness and fondness towards beer. Freshly made beer is leading the charts as nothing beats crafted beer. Some handful of states in India such as Haryana, Karnataka, Maharashtra, West Bengal and Punjab has given licenses to run microbreweries. Despite of having such license, no trace of microbrewery can be found in West Bengal. Delhi being a metropolitan, still doesn’t have a license to run their own microbrewery. Proposals have been made to the government by five star hotels, malls and private individuals for granting the license of microbreweries in Delhi to which the government says that it will consider the said issue after the Delhi State Elections in February. While Punjab got its first microbrewery in 2013.

‘Microbreweries’ are not as such a distant dream it has become a reality now because steadily the states are granting licenses to run microbreweries  as the people are getting more interested in the beer culture. Some believe it to be an unexplored profitable business while some are just happy with consuming its fresh and diverse flavors.

For any query that you may have regarding any legal process related to setting up a microbrewery or its license, feel free to ask by commenting below.

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88 COMMENTS

  1. i would like to know about the complete project in Bangalore , i would be grateful if i get the complete project details like machine suppliers, license cost, raw materials, & bar setup
    plz mail on :[email protected]

  2. Hi I want to know how to start the microbrewery company in andhrapradesh – rules, license, certificates, equipments, raw materials, procedure, cost and production….. please let me know need somebody’s guidens , I will really appreciate that
    My email ID is –
    [email protected]

  3. Hi I want to know how to start the microbrewery company in Karnataka- rules, license, certificates, equipments, raw materials, procedure, cost and production….. please let me know need somebody’s guidens , I will really appreciate that
    My email ID is –
    [email protected]

  4. i would like to know about the complete project in Kolkata, i would be grateful if i get the complete project details like machine suppliers, license cost, raw materials, & bar setup
    plz mail on “[email protected]

  5. Hi I want to know how to start the microbrewery company in West Bengal or in Karnataka- rules, license, certificates, equipments, raw materials, procedure, cost and production….. please let me know need somebody’s guidens , I will really appreciate that
    My email ID is – [email protected]

  6. I want to set up a brewery in Haryana and start selling bottled craft beer in Delhi NCR .
    Is this prossible , if yes then what will b the procedure and initial investment .
    Thanks and Regards
    Bhanu Patyal

  7. need to know the procedure of getting new imported beer brands registered in hyderabad Telangana. to set up a distribution network in the state.

  8. i would like to know what is the type of land required to establish the brewery project.
    1) Agriculture land, 2) Industrial land, 3) Residential land would do.

    BBS

  9. i would like to know about the complete project in Karnataka, i would be grateful if i get the complete project details like machine suppliers, license cost, raw materials, & bar setup
    plz mail on :- [email protected]

  10. Very Good Article, I have a place to setup the micro brewery in bangalore / near bangalore. Can any one help me on setup cost & total cost required to start a business of the same, my email id: [email protected].

    Arjuna Reddy

  11. Hello there,
    I wanna know all the procedure and documents require to open microbrewery in or around Delhi.Is there is any consultant who can guide me.
    Would you please provide all the
    information on my email [email protected].
    Thanks in Advance.
    Cheers !

  12. Hi Ms Nigam,

    Nice article. Can you please mail me the procedure for West Bengal on setting up microbrewery please. Also kindly share your professional contact details please. Regards

  13. I want to start a brewery in West Bengal or sikkim. Can you help me with knowing the industry,its scope and aprox investment.

  14. Hi, your write up was very informative for a starter.

    I would like you to help me with any insight on the rules and regulations with regards to the microbrewery licensing and permission in chennai. Are costs heavily applicable for restobars as well and what licensing is needed with respect to that.

    Also if you have any informations pertaining to the same points in regards to Bangalore as a market, it would be greatly helpful.

    Thank you

  15. Hi Vrinda,
    Please contact me. I have a special plan for the micro brewery business with a special Japanese formula which is not available in India so far.

  16. Hi ,
    I am from Goa origin and now in south Africa. I have a good concept for beer to produce in kegs. if interested please send me email – [email protected]
    all equipment will come from south Africa. and low setup cost. licensing you have to acquire.
    will also support you with high quality ingredients for a wonderful taste of beer and you will attract more clients and sales.

    please reply pereira

  17. Hi, I am seeking for an approval to sale of brew beer in a cafe on highway.

    Question arise in my mind is that, as in Rajasthan we cannot produce brew beers, so if we get it from Gurgaon (where it is legal to produce brew beer) so can we at least sale it any near by state?

  18. hi

    i am interested in opening kegging company in Goa for craft beer and the supplying to various pub goa & and around Maharashtra( Mumbai ) is it possible can help with basics of what i need to do

    • in rajasthan there is no law regarding brewing of beer and jaipur falls under dark zone which means u cannot manufacture because of scarcity of water

  19. Very informative article. Would you be kind enough to mail me rules and regulations of setting up of brewery/microbrewery in West Bengal. I am interested.

  20. Hello I’m aspiring to established this in Haryana could u pls let me know the linence requirement and other requirements please

  21. Hi

    It is a knowledgeable article. Could you pls let me know if the micro brewery or brewery can impose VAT of 10% or more on the beer they sell to their customers. Or any VAT applicable on beer they sell

    Pls confirm

    Thanks
    Amit

  22. Hello,
    I am aspiring to setup a microbrewery in any of the states like Karnata,Delhi, UP or Punjab.
    Could you please give me more info on my email id [email protected] .Thanks in advance for getting in touch.

    • Dear Karan,

      . Licences need to be applied for
      i. Commercial Electricity line
      ii. Commercial water line- Municipality/ underground bore water
      iii. Commercial water meter is required
      iv. Land registration/ Lease sanction
      v. Company registration
      vi. Waste water disposal certificate from pollution control board
      vii. Fabricated equipment quality certificate from third party inspection (loyds, SGS, etc.)
      viii. Water quality testing certificate from quality control labs (SGS, etc.)
      ix. Quality Control (QC) certificate of finished beer from govt. approved QC labs, on random inspection basis.
      x. Trademarking of the Logo (not must though)

      Allow me to introduce myself as a restaurant and hotel consultant with 26 restaurants in UAE and 135 in India.

      I have also consulted for MIcro Breweries and Brew Pubs.

      Looking forward to connecting with some people who require assistance in building a restaurant/micro brewery / a brew/pub/ hotel

      Yours Sincerely,

      Ishaan Sarkar
      Founder: MAD OVER HOSPITALITY
      Partner: MAlt & Salt – UAE

      +918586987773 / http://www.moh.asia
      https://www.linkedin.com/in/ishaansarkar/

  23. What is the procedure for setting up a microbrewery in Kolkata attached to a pub, for retail distribution?
    Please elaborate.

  24. very nice article,,, would be interested in knowing the legal process in Bangalore. btw, how did you calculate the set up cost? is it possible to send a sample? you can send info to my email:
    [email protected]

  25. What is the licensing process for setting up of independent microbreweries? Sales may be through your own pub or through third party pubs

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