Karnataka reduces premium liquor prices

Bengaluru: In a bid to balance the cost of premium liquors with neighbouring states and boosting local sales, the Karnataka government has slashed excise duty slabs, leading to a reduction in the prices of high-end liquor brands across the state. The new pricing structure, effective from August 27, comes as part of the government’s efforts to address longstanding demands from the hospitality industry and to curb the outflow of consumers purchasing alcohol from other states due to higher local prices.

The government reduced the number of excise duty slabs from 18 to 16, which has resulted in a price drop of 15-25% for premium Indian Made Liquor (IML) brands, including popular categories such as brandy, whiskey, gin, and rum. This reduction is expected to make premium liquor more affordable and increase excise revenue for the state by encouraging more local purchases.

Previously, the high prices of premium liquors in Karnataka had led to a significant number of consumers in border areas opting to purchase these products from neighbouring states where prices were lower. The state’s revised excise duty structure now aligns the prices more closely with those in adjacent regions, aiming to stem this cross-border purchasing trend. The revision, initially slated to take effect on July 1, 2024, was delayed due to disagreements between the state government and distilleries over how the benefits of the new pricing structure should be passed on to consumers. The government insisted that distilleries maintain or lower their declared prices to ensure that the cost reductions would directly benefit consumers. Distilleries, however, were hesitant, fearing potential losses due to the lower selling prices.

Despite these concerns, the reduction has now been implemented. The changes are expected to stabilize the market, with premium liquor prices falling by anywhere between Rs. 200 and Rs. 450 per bottle.

As the new rates come into effect, the Karnataka government and the Excise Department are optimistic that this rationalisation will not only bring prices on par with neighbouring states but also boost local sales and enhance overall revenue.