Karnataka’s steep hike in liquor licence and excise fees has been slammed by the industry, especially local distillers who say they will be forced to move out. Neighbouring states, especially Andhra Pradesh, are already rolling out the red carpet.
Under fire for the hike, the state government on June 23 halved the proposed 100 percent increase in licence fees for distilleries, breweries, and other alcohol-selling units. Revised rates will come into effect from July 1.
Huli, India’s first jaggery-based rum brand which is headquartered in Mysuru, has criticised the fee hike. On June 23, Huli co-founder Aruna Urs posted on X: “The state government is literally forcing #Huli to move out of Mysuru to Goa or Maharashtra. The annual distillery licence fee has been increased by 50%! Is this @INCIndia’s idea of ease of doing business?”
Also read: Karnataka draws a fifth of its revenues from liquor taxes
A day later, he added, “Got a call from a neighbouring CM’s team with an offer to tailor excise policies to suit #Huli. They had tracked me down via Twitter. That is some commitment to governance and prosperity! Meanwhile, we now operate in our CM’s constituency and half our team are his voters!”
Urs told Moneycontrol he was impressed when an official from the Andhra Pradesh CM’s office reached out after his tweet. “They’re rolling out the red carpet, recognising the job creation potential. Karnataka, meanwhile, is in slumber. Relocating isn’t easy, but if I set up a second unit, I’ll seriously consider Andhra Pradesh,” he said.
Urs said small distillers would be the worst hit, as the steep fee hike makes operations unviable.
Also read: Karnataka CM to officials: Stop liquor smuggling from Goa, face action for missing tax targets
Not just fee hike, the Karnataka government, which is under financial pressure to fulfil its poll promises, has raised the prices of beer and low-end Indian-made liquor (IML) prices four times in the past two years.
“The proposed 100 percent hike was reduced to 50 percent after concerns raised by distillers, in a meeting chaired by the CM. This revision comes after eight years,” Ritesh Kumar Singh, principal secretary, finance department, told Moneycontrol.
“We’re also introducing reforms: licences will now be valid for five years instead of one, with self-declaration for renewals and no physical inspections. These measures have been welcomed by most distillers.”
This isn’t the first time distillers have locked horns with the government. In December 2023, the excise department barred third shift (10 pm–6 am) operations at breweries in Mysuru run by United Breweries, AB InBev, Carlsberg, and B9 Beverages (Bira), citing staff shortages. The government was forced to roll back the decision in the face of opposition from distillers.
Karnataka is among the few large states where liquor taxes make up nearly 20 percent of the total revenue.
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