Key Points
- Karnataka’s strong beer prices may increase by 10-20% under a new excise duty proposal.
- The Beer Association of India (BAI) has formally requested the government withdraw the draft proposal.
- Major beer brands fear the change could impact investments and increase compliance challenges.
Proposed Excise Duty Hike Raises Concerns
Beer lovers in Karnataka, particularly in Bengaluru, may soon feel the impact of a proposed excise duty hike on strong beers. According to a report from Hindustan Times, the state government’s draft notification suggests that beer prices could rise between 10-20%, depending on the alcohol content. Concerned about the consequences for both consumers and businesses, the Beer Association of India (BAI) has urged Karnataka Chief Minister Siddaramaiah to retract the proposal, warning it could severely impact the beer industry.
As it stands, Karnataka already has some of the highest liquor prices in South India, having adjusted alcohol prices twice in the past two years. This new excise hike could add further strain on beer consumers, especially in the premium market segment.
BAI’s Appeal to the State Government
In a letter to the government, the BAI highlighted that a 35% tax increase on stronger beers could make beer less accessible to the public and result in a significant sales drop. They estimate that state revenue from beer taxes could fall by as much as Rs 400 crore if the proposed hike takes effect.
Potential Implications for Investment and Operations
The BAI also warned that major beer brands such as United Breweries, AB InBev, and Carlsberg, who have substantial investments in Karnataka, might reconsider further expansion in the state if the proposal is approved. Additionally, a new requirement for brewers to disclose sugar and malt content has raised concerns within the industry. The BAI fears that such disclosures may create confusion among consumers and burden breweries with compliance challenges, forcing them to reveal proprietary information.
This proposal has raised questions about the ease of doing business in Karnataka and increased compliance costs for manufacturers. As the discussion continues, both beer lovers and breweries in Karnataka are closely watching the outcome of the proposed changes.