PUDUCHERRY: Puducherry’s restobar and microbrewery boom has finally burst with business dropping about 30% compared to last year. Insiders say that at least seven restobars are up for sale and two out of the four microbreweries in the town have shut shop. Oversaturation, decline in tourism, rising costs, and licencing and taxation policies are being blamed for the sharp slump faced by the businesses.
C Elavazhagan, owner of Hoppers, one of the first restobars in the region, says the number of restobars surged post the Covid-19 pandemic, thanks to the Puducherry government’s liberal licencing policy. “Before the pandemic, Puducherry had just five or six restobars. Now, there are 221 under the FL2 (tourism) category, in addition to 205 regular bars. The Puducherry region alone has 341 bars — 194 restobars and 147 regular bars — spread across just 293 sq km,” Elavazhagan explains.
Microbreweries, which require significant investment, have been hit the hardest. Two units — one on Mission Street and another in Anna Nagar — have shut. Rangaraju Narayanasamy, partner at the Catamaran Brewing Company, Puducherry’s first microbrewery which opened in 2021, attributes the difficulties to outdated polices that don’t align with trends in neighbouring states or globally. The biggest hurdle is the excise duty structure, according to sources.
“We have to pay excise on installed capacity, not actual sales. Even if we don’t sell, we still owe taxes,” laments Elavazhagan, who had to close down his microbrewery.
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Craft beer has a short shelf life of 40 days, but the government does not permit sales outside Puducherry. “To survive, we started serving beer and wine, but the Rs 6 lakh additional license fee makes it unviable,” says Narayanasamy.
Newer restobars cropping up in the Tamil Nadu villages along the East Coast Road abutting the UT has worsened the situation. With intense competition, many restobars started cutting corners on services or resorting to illegal practices, sources say. “Several sell liquor at MRP, like at retail stores. This puts compliant businesses at a disadvantage,” an industry insider reveals.
At the same time, the profile of tourists visiting Puducherry has changed. “Most young visitors prefer to buy liquor and food from stores and consume them at their budget accommodations instead of dining at restobars,” the sources add. According to Vijay Dhoom, a nightlife promoter, tourists are now spending an average of Rs 1,000-Rs 1,500 per person per day.
Narayanasamy agrees in the need for tax reform, “For microbreweries, excise duty should be charged on actual production, not installed capacity, as done in other states. A separate beer and wine license fee for restaurants under the tourism category, priced at Rs 2 lakh or lower, should be introduced,” he says.
Chief Minister N Rangasamy has defended his government’s easing of restrictions on restobars citing the requirement for revenue to implement welfare schemes. Government officials downplayed concerns. “One or two businesses close annually due to competition, but this hasn’t affected overall revenue. Excise revenue, in fact, has risen by 3%, from Rs 1,460 crore in 2023-24 to Rs 1,525 crore as of March 28, 2025,” say officials.