Beer To Get Costlier In Karnataka? Govt Plans For A 10% Duty Increase

To stimulate demand for Indian-Made Liquor (IML), the Karnataka government is gearing up for a 10-percentage increase in beer duty scheduled for early February. The state excise department has invited public feedback until January 27, anticipating the decision's implementation thereafter.

According to T Nagarajappa, additional excise commissioner, the proposed hike in additional excise duty (AED) from 185% to 195% is expected to raise the cost of a 650ml beer bottle by Rs 8 to Rs 10. This adjustment is estimated to generate an additional monthly revenue of Rs 20 crore for the state, considering Karnataka already boasts the highest liquor prices among southern states.

While consumers speculate that the move targets increased beer sales during the upcoming summer season, excise officials maintain that the objective is to boost Indian-made liquor sales. In the past year, non-IML sales have surged, contributing more to the exchequer. In 2023, beer sales witnessed a 15% increase, while IML sales experienced a marginal rise of slightly over 2%.

Some industry observers find the rationale behind the beer duty hike perplexing, suggesting that increasing beer prices may not necessarily drive up IML sales. Instead, they propose a reduction in IML prices to stimulate revenue. Bar owners attribute the decline in IML sales to the entry of affordable beer brands priced at Rs 100 per bottle, gaining popularity, particularly among the working class.