Industry bodies give mixed response to overhaul of liquor tax framework in Karnataka

Arun Kumar Parasa, president of the Karnataka Brewers and Distillers Association, warned that the proposed changes could lead to higher retail prices, particularly for commonly consumed liquor categories. He said the association plans to take up the issue with the chief minister and expects the government to consider industry feedback before finalising the policy.

The Brewers Association of India described the move to an Alcohol-in-Beverage (AIB) framework as a ‘watershed moment’ for the sector, stating it links the revenue maximisation goal of the state with desired public health outcomes. Vinod Giri, director general of the association, said the framework aligns with global best practices and WHO recommendations. The association also highlighted other reforms in the draft rules, including price deregulation, 24-hour operations for breweries and distilleries, online approvals, automatic licence renewals, and provisions supporting brewery-linked tourism.

Investor sentiment turned positive after the draft proposal was released, with shares of liquor companies Tilaknagar Industries, Radico Khaitan and United Breweries rising by up to 3% on Monday following the draft proposal release.

The Karnataka Excise (Excise Duties and Fees) (Amendment) Rules, 2026 were published in the state gazette, introducing the Alcohol-in-Beverage (AIB) framework. AIB is defined as the alcohol content per litre, with a uniform duty of ₹1,000 per litre of pure alcohol applied to spirits (brandy, whisky, gin, rum) when supplied to distributors, and the same rate for bottled beer sold or imported into the state. The reform package also includes price deregulation, 24-hour operations for breweries and distilleries, online approvals, automatic licence renewals, and provisions supporting brewery-linked tourism. Officials indicated that the first four slabs—serving lower-income consumers—could see the most significant impact on excise revenue, and price implications noted include a standard 180 ml bottle potentially rising to ₹105–₹110 under the new regime, from the prior ₹95 (which had risen from ₹80 the previous year). The changes form part of the Karnataka Excise (Excise Duties and Fees) (Amendment) Rules, 2026 and invite objections within seven days of notification.