Karnataka, which already has the highest liquor prices in South India, has raised alcohol prices twice in the past two years.
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Beer enthusiasts in Bengaluru might soon see a price hike as the Karnataka government considers raising excise duty on strong beers. According to a new draft notification, prices could increase by 10-20% for higher-alcohol beers, sparking industry concerns. The Beer Association of India (BAI) has appealed to Chief Minister Siddaramaiah to withdraw the proposal, fearing it could harm the industry.
The draft notification proposes to double the excise duty on strong beer to Rs 20 per bulk litre, increase the minimum billing price for beer in the state to Rs 300 per case and Additional Excise Duty (AED) to 195 per cent of the billing price or Rs 130 per bulk litre whichever is higher.
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Karnataka, which already has the highest liquor prices in South India, has raised alcohol prices twice in the past two years. This proposed change would further increase costs, particularly affecting premium beer consumers.
The Beer Association of India (BAI) has raised serious concerns with the Karnataka government regarding the proposed 35% tax increase on stronger beers, warning it could make beer less affordable and lead to a significant drop in sales. The BAI estimates this could reduce the state’s revenue from beer taxes by approximately Rs 400 crore. In its letter, the association highlighted the investments of major brands like United Breweries, AB InBev, and Carlsberg in Karnataka, cautioning that the policy may prompt these companies to reconsider further expansions in the state.
The letter stated, “The proposed 35% increase in taxes on stronger beers could result in a significant drop in sales. We estimate the state’s revenue from beer taxes could decrease by Rs 400 crore if this goes forward.”
“Due to the impact on MRP, we estimate the tax revenues from the beer category may actually fall to the tune of Rs 400 crore revenue from this proposal,” said BAI.
Additionally, the BAI voiced opposition to a proposal requiring beer manufacturers to disclose sugar and malt content on labels, arguing that it could confuse consumers and impose compliance burdens, potentially discouraging business operations in Karnataka.
As discussions continue, both brewers and beer lovers in Bengaluru are watching closely to see how these potential changes will unfold.
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The new draft amendment from the Karnataka government proposes reclassifying beer into three distinct categories based on alcohol content, each with its own excise duty rate. Currently, beer is subject to a uniform duty, but the proposed rates would impose Rs 10 per bulk litre for beers with below 5 per cent alcohol, Rs 16 per bulk litre for beers with 5-6.5 per cent alcohol, and Rs 20 per bulk litre for beers with 6.5-8 per cent alcohol.
