The Indian state’s new excise policy has reduced the previously proposed liquor licence fee hike of 100% down to 50%, but beer producers still face increased excise duties.

The Karnataka government has announced that it has increased liquor licence fees by 50% from 1 July 2025. Initially, the state had planned to double licence fees, but following industry backlash, it has revised down the hike and extended the licence renewal period from one to two years. Despite this partial rollback, brewers and micro-distilleries remain concerned, particularly as beer excise duties have also been raised.

Under the new structure, the Additional Excise Duty (AED) for draught beer has been increased from INR5 per litre to INR7, while bottled beer now attracts INR13 per litre, up from INR10. Industry representatives say these increases could severely impact smaller breweries, many of which are already struggling with rising operational costs and subdued post-pandemic demand.

The Karnataka Brewers Association has expressed disappointment that concerns raised by microbreweries and local producers have not been fully addressed. They argue that while the licence fee revision offers temporary relief, the hike in AED disproportionately affects craft brewers and could lead to reduced production and job losses in the sector.

Karnataka, which contributes around 15% to India’s overall beer sales, has long been a hub for the country’s craft beer movement. Industry players warn that policy shifts that increase costs could stunt the state’s reputation as a leader in innovation and brewing culture and drive the industry to operate in more lenient states.