BENGALURU: Liquor prices in Karnataka in the first four slabs (with lowest MRP) of Indian Made Liquor (IML) are likely to go up from April 1, given the increase in Excise revenue target by Rs 3,500 crore for financial year 2025-26. CM Siddaramaiah announced Rs 40,000 crore as the “revenue collection target for 2025-26” while rationalising the estimated total revenue (collection) of “Rs 36,500 crore from (earlier Rs 38,525 crore) State Excise in revised estimates for 2024-25.”
“A hike in Additional Excise Duty (AED) in the first four slabs of IML, with the lowest Maximum Retail Price (MRP) of Rs 65 per 180ml is likely for resource mobilisation. The MRP in these slabs is lower than in neighbouring states. There may be a marginal increase in AED, which would result in a price push by Rs 10 to Rs 15 for 180ml in the lowest segment. The first four slabs contribute around 80 per cent towards Excise revenue,” said sources, who did not wish to be named.
On the revenue target revision for 2024-25, sources said, “The department has realised Rs 33,000 crore as on March 7. It is impossible to stretch it to Rs 38,525 crore by March 31. Even getting Rs 36,500 crore by the month-end may be difficult.”
The state government has proposed to auction defunct, unused excise licences to mobilise additional resources. “This will take some time because of the procedures involved,” said sources.
TNIE had reported on February 26 on the government mulling auctioning of defunct CL-2 (retail liquor shops) and 11-C (government-owned Mysore Sales International Limited retail outlets). There are around 200 CL-2 and 263 MSIL defunct licences in the state.
The liquor industry welcomed the move to auction unused licences and rationalise excise slabs by making the prices of premium segments (of IML) comparable to neighbouring states.
“Reduction on premium liquor is a welcome step but the increase in beer prices just before the budget has been a setback for retailers. Summer is peak season for beer sales and consumption, and now we are getting into the IPL season. Escalation in beer prices has affected business. Auctioning of licences in a transparent way is a welcome move but we will have to wait and watch how it is going to pan out,” said Chapter head (Bengaluru), National Restaurants Association of India (NRAI), Chethan Hegde, and founder of ‘1522’, a popular pub chain in the city.
The CM said the “government has developed software and online process for all services in the excise department which will increase efficiency in administration.”
The industry has welcomed this move. “Digitising of Excise processes will help in ease of doing business. NRAI has been pushing for this for the last couple of years and credit must be given to previous and current Excise commissioners for making this happen,” said Mukesh Tolani, core committee member, former chapter head, NRAI, and co-founder and director, ‘Toit’, a well-known microbrewery. He welcomed price rationalisation in higher segments of IML and the proposal to auction licences.
Tushar Fernandes, local partner, ‘Olive Bar & Kitchen’, called rationalising of excise duty a “significant move” to keep price parity of IML in line with neighbouring states. “The move to allocate unused liquor licenses through an e-auction will hopefully mark some reforms and eliminate opaque practices.”
BUDGET HIGHLIGHTS FOR STATE EXCISE
The government has rationalised excise slabs by making the prices of premium segments comparable to the neighbouring states. The process of rationalisation will be continued during the current year by making slight adjustments in the excise duty structure.
It is proposed to allocate unused liquor licenses through a transparent electronic auction which is expected to aid in additional resource mobilisation to the state.
Government has developed software and online process for all the services in the excise department which will increase the efficiency in administration and improve public service delivery.
A total revenue of Rs 36,500 crore is estimated from State Excise in revised estimates for 2024-25.
Revenue collection target for 2025-26 is Rs 40,000 crore.