The Indian state will introduce a big hike to its excise duties on Indian Made Foreign Liquor, whereas duties on beer will remain unchanged

India’s largest alcohol-producing state is facing mounting pushback from the country’s spirits industry after Maharashtra approved a sharp hike in excise duty on Indian Made Foreign Liquor (IMFL).

The decision, which imposes an excise duty equivalent to 4.5 times the manufacturing cost of IMFL, is expected to push maximum retail prices up by as much as 85%, according to the Confederation of Indian Alcoholic Beverage Companies (CIABC).

Critics have also flagged the government’s decision not to raise taxes on beer, calling it a distortion that may skew consumption patterns and create an uneven playing field. The Brewers Association of India (BAI), however, defended the exclusion, noting that beer already bears higher relative taxation in the state and the hike for spirits will make taxation across alcoholic categories more equitable.

The new excise regime could raise annual state collections by about INR140 billion (US$1.623 billion) industry estimates suggest, but at a potentially significant cost to legitimate industry players and consumers alike.

CIABC, representing the country’s leading spirits manufacturers, has urged the state to reconsider the policy, citing potential long-term impacts on revenue, employment, and public safety.

Industry leaders also point to the heavy burden placed on legitimate players, especially national brands, whose competitiveness could be undermined in favor of cheaper and often illegal alternatives. Moreover Maharashtra, which shares porous borders with several lower-tax states, could see a rise in cross-border inflows and counterfeit products, potentially reversing gains made in regulating the alcohol market.

IMFL duties currently account for approximately 60% of Maharashtra’s excise revenue.