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 first major changes since 2011.
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, helping fund Maharashtra state government programs and welfare schemes.
IMFL duties currently account for approximately 60% of Maharashtra’s excise revenue.
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.
Some industry leaders have pointed to the heavy burden placed on legitimate IMFL producers, especially national brands, whose competitiveness could be undermined in favor of cheaper and often illegal alternatives.
Maharashtra was the most highly taxed state in the country in terms of this industry,” the former Director General, CIABC Pramod Krishna shared in comments to the Indian Express.
“The new decision is likely to make the situation worse. High prices in a particular state leads to the smuggling of alcohol from less taxed states or from neighbouring states.”
However, the policy changes also include some positive moves for the local liquor industry, with the creation of a new category of Maharashtra Made Liquor (MML) to support local farmers and liquor producers.
The new category, which will only include grain-based alcohol manufactured in the state, is designed to stimulate local production and be priced between what is known as ‘country liquor’ in India and IMFL.
