A Policy Blueprint for Kombucha in India: Reclassification, Reform, and Survival

The recent GST overhaul in India has placed all beverages (except for fruit juice/pulp-based, milk/mylk-based) with added sugar, flavourings or sweeteners including aerated, flavoured, or caffeinated non‑alcoholic drinks into a 40% “demerit slab”. While this is aimed at curbing unhealthy consumption, the policy broadly sweeps in functional, probiotic, or otherwise health‑oriented fermented beverages like kombucha in the same category, confusing consumers of its positioning and claimed health benefits. 

Here are the key recommendations to protect both the industry and consumers, and to ensure kombucha remains a viable, safe, trusted category.

1. Classification of kombucha under a separate sub code in HSN (Harmonized System Nomenclature) reflecting a lower GST % which takes into consideration its health benefits (gut health, probiotics, fermentation) and distinguishes it from sodas or energy drinks
2. Adopting a sugar‑based taxation model - Push for a slab structure where the tax rate depends on the amount of added sugar per 100 ml. The Indian Beverage Association already advocated for a sugar‑based levy approach, pointing out that low/no sugar variants are being unfairly taxed under the existing/new slab
3. Formal recognition of kombucha as a functional/health beverage -  Request that kombucha be formally classified under FSSAI not as “flavoured / sweetened non‑alcoholic beverage,” but under a Functional Beverage / Probiotic Health Drink category.
4. Establish standardisation of kombucha and its variations - pasteurised, unpasteurised, from concentrate, traditionally fermented, mandatory ingredients, level of post-manufacturing processing, preservatives, additives, starter culture definition, carbonation, alcohol compliance, pH, labelling requirement, probiotic claim guide, safety guideline

An industry body and standards matter more than anything right now because without clear definitions and classification, the tax and regulatory authorities will continue to view kombucha under the same lens as sodas and energy drinks. An industry body can assert standards so kombucha is no longer mis‑classified.

What should kombucha brands do immediately?

Consult with GST legal/tax experts to create an optimised product line based on the new classification

Avoid Mass Retail Expansion Until Policy Clarity Emerges

Launch variety packs to reduce price shock per bottle

Shift a Portion of Sales to Non-MRP Channels for flexible pricing

Next step

Policy change only comes with pressure and proof. Kombucha’s low sugar, fermented, probiotic-rich profile needs better representation at the policy table and it begins with

• Forming an Indian kombucha brewers association for lobbying and for representation at national level

• Submit formal representations to the GST Council requesting a distinct GST slab or reclassification as a "functional health food/beverage
  

• And/or advocate for a more nuanced categorisation of beverages under 'other non-alcoholic beverage' (water-based, tea-based) to separate them from aerated drinks or colas with differential GST treatment based on nutritional properties
• Collaborate to commission a white paper on health benefits, sugar content, and fermentation science.

• Introduce a Micro‑Brew/Artisanal Komubucha Special Tier

  • Because many kombucha producers are small or medium scale, often producing in micro‑batches, they should be protected via a special tier.

  • This tier would recognize artisanal production methods, smaller volumes, traditional techniques, etc., and provide preferential GST rates or tax credits.

  • Drawing from international examples: Kombucha Brewers International (KBI) in the U.S. has a Code of Practice that defines what counts as “authentic kombucha,” including categories like “traditional,” “processed,” “hard”, etc., to protect product integrity.

To protect the kombucha industry from regulatory overreach and ensure it continues to grow as a health-positive, small-business-driven sector, India must adopt a smarter, more nuanced policy approach. Key recommendations include reclassifying kombucha under a functional food or wellness beverage category, implementing sugar-indexed GST slabs, and creating a micro-brew tier for artisanal producers. Establishing a national kombucha standards body modeled after the U.S. is also critical to define ingredients, fermentation processes, alcohol thresholds, and labeling norms.

These steps, along with supportive tax incentives and infrastructure alignment, will not only safeguard small businesses but also reinforce kombucha’s place in India’s clean-label, preventive health movement.