KOCHI: The beer industry in Kerala is grappling with a bitter brew of policy ambiguity and double taxation. Since December 2022, when the state government scrapped turnover tax (TOT) on local manufacturing units — replacing it with a 4% sales tax hike and a 1% increase in Kerala State Beverages Corporation (Bevco) margins to maintain revenue neutrality — breweries have been left in limbo.
“Beer has been served a very unfair double blow on turnover tax in Kerala,” Vinod Giri, director-general of the Brewers Association of India (BAI), told TNIE.
While TOT was removed after repeated requests by the alcoholic beverage industry, the sales tax was increased by 4% to make up for revenue loss, he said.
“Even at a cursory glance, the removal of TOT and the increase in sales tax were interlinked and meant for all alcoholic beverages. But the notification removing TOT somehow failed to explicitly include ‘breweries.’ At the same time, the amendment to increase sales tax by 4% did state foreign liquor, including beer. As a result, the 5% TOT remains on beer, and now it also attracts 4% additional sales tax. This is double taxation and is badly hurting the beer industry and brewers operating in the state,” Giri said.
A spokesperson for United Breweries Ltd (UBL) echoed the concern.
“For over five decades, UBL has been investing in Kerala by establishing the state’s largest brewery, creating significant employment, and supporting local communities. To sustain and expand these investments, it is vital to ensure parity with the IMFL industry by excluding beer from TOT.
Such policy clarity will create a level playing field, accelerate category growth, safeguard consumer interests, and attract fresh investments under ‘Make in Kerala’, further strengthening the state’s economic progress,” the spokesperson said.
Excise department officials, however, said there are currently no proposals to reduce the TOT on breweries.
Experts argue that a reduction in taxes on beer could offset the declining sales of beer in the state. According to Bevco data, beer sales in Kerala slumped from 112 lakh cases (wholesale to bars and retail through Bevco outlets) in 2022–23 to 102.39 lakh cases in 2024–25. In contrast, Indian Made Foreign Liquor (IMFL) consumption surged by 9.74 lakh cases during the same period, touching 229.12 lakh cases.
Nationally, beer sales grew 9% year-on-year in 2024–25, according to BAI, underlining how Kerala’s policy gap has bucked the wider trend.
Bevco data
Beer sales in Kerala slumped from 112 lakh cases (wholesale to bars and retail through Bevco outlets) in 2022–23 to 102.39 lakh cases in 2024–25
In contrast, Indian Made Foreign Liquor (IMFL) consumption surged by 9.74 lakh cases during the same period, touching 229.12 lakh cases
Nationally, beer sales grew 9% year-on-year in 2024–25, according to BAI, underlining how Kerala’s policy gap has bucked the wider trend