After last year’s beer price hikes, the Karnataka government is considering yet another increase, leaving beer enthusiasts worried about rising costs. This would mark the third hike in just over a year if implemented.
The first hike in the 2023 state budget raised beer prices by 10%, increasing the cost of a 650 ml bottle by ₹10-₹15. Another 10% hike in February 2024 resulted in an additional ₹15 increase per bottle. In August 2024, the Siddaramaiah-led government proposed higher excise duties on strong beer, which is now under review.
Excise Minister RB Thimmapur confirmed on January 9 that discussions are ongoing but no final decision has been made. “We are not planning to increase the price of liquor as of now, except for beer. We are contemplating a price hike for beer. However, we have not yet discussed this with the Chief Minister to finalize the decision,” he stated.
Brewing Industry Concerns
The Brewers Association of India (BAI) raised alarms about the impact of these cumulative hikes in October 2024. The organization argued that such measures, coupled with stricter labeling rules and alcohol content classifications, could harm the beer industry and reduce the state’s revenue. The BAI urged the government to reconsider, warning of potential harm to both consumers and the economy.
Proposed Excise Duty Hike
The draft notification suggests excise duties on strong beer could double to ₹20 per liter, with the minimum case price for beer increasing to ₹300. If approved, this could push the cost of a beer bottle from ₹95 to as much as ₹140, making Karnataka’s beer prices among the highest in India.
Strong beer accounts for 90% of Karnataka’s beer market. The BAI expressed concerns that these changes could lead to reduced sales, increased cross-border smuggling, and a decline in state tax revenue. With over 11 breweries operating in Karnataka, the association also warned that the state’s beer production hub could face setbacks, potentially driving businesses away.
A History of Excise Duty Hikes
This isn’t the first time Karnataka has raised excise duties. In July 2023, Chief Minister Siddaramaiah announced a 20% hike on Indian Made Foreign Liquor (IMFL) and beer, which sparked similar debates over the economic and social impacts of these policies.
As discussions continue, the government faces pressure from both consumers and industry stakeholders to strike a balance between revenue generation and fostering sustainable growth in the beer sector.
