India’s beer association urges Karnataka government to reconsider its proposed duty hikes
The Beer Association of India (BAI) has appealed to the Karnataka government to withdraw draft notifications proposing a duty hike based on alcohol content in beer, warning that the move could lead to a 10-20% price increase in the mainstream and premium segments.
This would mark the third beer price increase in the state within the last 12 months. The proposed changes also would come ahead of the festive season, including Diwali, Christmas, and New Year celebrations.
Industry experts fear that higher prices could dampen consumer demand, negatively impacting both sales volumes and the state’s revenue from the beer category.
The draft notification suggests doubling the excise duty on strong beer to INR20 (USD0.24) per bulk litre, raising the minimum billing price to INR300 per case; and increasing the Additional Excise Duty (AED) to 195% of the billing price or INR130 per bulk litre, whichever is higher.
The BAI, representing major brewers including United Breweries, AB InBev, and Carlsberg, argues that these proposals are not in the interest of stakeholders.
The association estimates that the proposed 35% tax increase on stronger beers could make the product unaffordable for many consumers and potentially reduce the state’s tax revenue from beer by approximately INR4 billion due to decreased sales.
In addition to tax concerns, the industry body has requested the withdrawal of proposals requiring beer manufacturers to declare sugar content on labels; and limiting sugar use to 25% of the weight of malt or grain. The BAI contends that such labelling requirements are unnecessary and could clutter packaging, making products less appealing to consumers.
Karnataka, already holding the highest liquor prices in South India, has increased alcohol prices twice in the past two years. The proposed hike would further elevate costs, particularly affecting premium beer consumers.
The association also highlighted that these draft notifications, if enacted, could jeopardise more than INR50 billion invested in 10 breweries within the state due to reduced commercial viability. It cautioned that the measures might also deter future investments in capacity expansion.
