Maharashtra's Excise Duty Hike: Stirring Up the Spirited Market

The Maharashtra government's decision to significantly raise excise duty on Indian Made Foreign Liquor (IMFL) by about 85% has sparked fear within the industry of a major sales slump, as reported by the Confederation of Indian Alcoholic Beverage Companies (CIABC). This decision, which specifically excludes beer from the excise hike, is expected to disrupt market dynamics and potentially undermine the presence of national brands.

The CIABC expressed concerns that this move could create an uneven playing field in the alcoholic beverages market, prompting a shift towards lower-category products. The organization has urged a reconsideration of the policy change, citing extensive adverse effects. On the ground, the hike translates to IMFL facing an excise levy of 4.5 times their production costs, although the government has refrained from raising duties on beer, drawing criticism from industry players.

CIABC highlighted that the IMFL sector contributes 60% of the state's excise revenue and warned that the duty increase could lead to illicit cross-border liquor flows due to Maharashtra's shared boundaries with states that have lower retail prices. The CIABC and other stakeholders seek a balanced approach to safeguarding both fiscal interests and the viability of the IMFL market in Maharashtra.

(With inputs from agencies.)