Liquor stocks plunge up to 5% as Maharashtra govt hikes excise duty on IMFL
Liquor stocks, including Allied Blenders, United Spirits, and Radico Khaitan, came under sharp selling pressure right from the opening bell on Wednesday, June 11, falling up to 5% as investor sentiment turned bearish after the Maharashtra government approved revenue-boosting changes in the excise policy, including a hike in excise duty on Indian Made Foreign Liquor (IMFL) and the introduction of a new category, Maharashtra Made Liquor (MML).
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Indian Express
20 hours ago
- Indian Express
Alcohol industry asks Maharashtra govt to rethink excise duty hike, calls for deliberations
Expressing concern over the increase in the excise duty on Indian made foreign liquor (IMFL) by up to 50 per cent by the Maharashtra government, the Confederation of Indian Alcoholic Beverage Companies (CIABC), the apex body of the Indian Alcoholic Beverage Industry, has urged the state government to reconsider the hike and hold deliberations with all stakeholders immediately. Sources in the excise department said the industry body was trying to protect its interest, but declined to comment on any possibility of a rollback. The state cabinet on Tuesday approved a hike in excise duty on IMFL, country liquor, and imported alcohol. The decision is expected to raise the state's annual excise collection by approximately Rs 14,000 crore as the prices of IMFL and premium foreign liquor brands are likely to increase by 50-80 per cent. The CIABC claimed that while the intent behind the proposed hike may be to enhance revenue collections by Rs 14,000 crore, the actual outcome may be contrary–driven by declining sales, rising illicit trade, and border leakages. The long-term impact could be deeply detrimental, not only for industry and employment, but also for public safety and overall state revenues. Stating that the CIABC had already written to the Maharashtra government urging it to start a consultative process with all stakeholders before releasing any final gazette notification, Anant S Iyer, Director-General, CIABC, said the hike in excise duty was projected to push maximum retail prices up by as much as 85 per cent, a step that could severely disrupt the market, erode the competitiveness of national brands, and jeopardise the availability of legitimate alcoholic beverages in the state. 'Such an unprecedented escalation in duties poses a serious deterrence to consumer access of established and reputed brands, compelling a shift toward lower-category products. This poses a serious threat to the stability of the IMFL industry in the state…such a move will have a far-reaching adverse impact,' Iyer said. He warned that higher MRPs often create a vacuum filled by illegal operators. The IMFL industry contributes approximately 60 per cent of the total excise revenue of the state.
Time of India
3 days ago
- Time of India
Liquor sales volumes to decline after steep, abrupt increase in duty: CIABC to Maharashtra government
The recent hike in the excise duty by the Maharashtra government will push the IMFL whisky MRP by about 85 per cent, which will lead to a significant drop in sales volumes, industry body CIABC has said. Expressing concerns over the recent Maharashtra Cabinet decision to hike excise duty on Indian Made Foreign Liquor (IMFL), CIABC said it could severely disrupt the market, erode the competitiveness of national brands, and jeopardise the availability of legitimate alcoholic beverages in the state. Moreover, the government's decision to not increase the excise duty on Beer would create an "uneven playing field" in the alchoBev market, CIABC said, urging the state government to rethink and reconsider the hike, which may trigger serious consequences. This will also lead to downtrading in the state, compelling a shift toward lower-category products, CIABC said, adding that "if implemented in toto, will have far-reaching adverse impact". On Tuesday, the Maharashtra government decided to increase the excise duty on IMFL and country liquor. Now, IMFL will be subject to an excise duty that is 4.5 times the manufacturing cost. However, the state government has not decided to increase excise duty on beer, a move criticised by several alcohol beverage players. CIABC further said the IMFL industry contributes approximately 60 per cent of the total Excise Revenue of the state. Questioning the rationale for not increasing excise duty on beer, CIABC said the excise Duty collected from a single case of IMFL is equivalent to that from four cases of beer, underscoring the critical importance of this category. "Furthermore, duty increase on IMFL, without corresponding changes for a category, such as beer, will create an uneven playing field and distort category dynamics, leading to possible adverse impact on revenue. The Confederation of Indian Alcoholic Beverage Companies (CIABC) said a steep and abrupt increase in MRP (maximum retail price) would destabilise consumer accessibility and purchasing power, particularly within the mass-market segment which caters to the common man. "This will lead to a significant drop in legal sales volumes, overlooking the interest of industry and its substantial investment in the state," CIABC Director General Anant S Iyer said, adding that it will also endanger the employment of people engaged in the entire value chain from farm to consumer. This will also lead to the proliferation of illicit, spurious liquor and counterfeit brands. It will also increase dumping from neighbouring states and may erode Maharashtra's tax collection. "Maharashtra shares borders with states that are porous. These states have similar brands which have lower MRPs for IMFL. Any additional price escalation will trigger large-scale dumping (exfiltration) from these states, resulting in illicit inflows that damage legitimate trade and erode the state's tax base," it said. CIABC said the retail price structure must align with consumer affordability. "We request that further deliberations be held with all stakeholders to arrive at a balanced, data-driven, and sustainable course of action that protects both revenue interests and the long-term viability of the IMFL sector in Maharashtra," CIABC noted. Earlier in the day, the Brewers Association of India (BAI) defended the Maharashtra government's recent decision to increase excise duty on IMFL whisky and not on beer, saying that taxes on beer are already very high in the state compared to other markets. Tax reforms were undertaken for beer in 2018-19, and it was long overdue for spirits, said BAI, a body of the top three beer companies - UBL, Brewer Anheuser-Busch InBev (AB InBev), which owns brands as Budweiser, Hoegaarden and Corona along with Carlsberg which operates here with Carlsberg and Tuborg brands, together accounting for around 85 per cent of sales in India.>
Hindustan Times
3 days ago
- Hindustan Times
Proposal to allow 2,160 new liquor shops put on hold after Shiv Sena objects
MUMBAI: In a bid to augment revenue, the state excise department headed by deputy chief minister Ajit Pawar on Tuesday proposed that 2,160 new liquor shops be allowed in Maharashtra. The recommendation was part of the cabinet proposal to increase the excise duty on liquor—the latter was passed on Tuesday, leading to a huge hike in liquor prices. The bid to increase liquor shops in the state, however, was immediately opposed by Shiv Sena ministers, citing the possibility of a backlash from the people and social activists. Ajit then offered to reduce the number to 360 shops but was still opposed by Sena ministers, following which chief minister Devendra Fadnavis put the proposal on hold. The state government committee, set up in January and headed by Valsa Nair, had proposed one licence per district to each of the 60 distilleries in the state. The liquor-manufacturing companies currently get a licence for one liquor shop, and since new licences have not been issued for over five decades, the excise department opted for the indirect route of issuing new licences to liquor-manufacturing units only. When the proposal came up for discussion, tourism minister and Shiv Sena leader Shambhuraj Desai, who was excise minister in the previous government, strongly opposed it. Other Sena ministers joined him, pointing out that a similar proposal brought in by Desai during the Eknath Shinde government's tenure, was opposed by Ajit Pawar's party which cited the possibility of a public backlash. Currently, there are 1,700 liquor licences for Indian Made Foreign Liquor (IMFL) and over 3,500 for country liquor in existence in Maharashtra. Owing to opposition from social activists and citizens, the government has not issued new licences since 1972. 'The excise department has been citing the licence auction system practised in other states, including Uttar Pradesh to back up its proposal,' said a senior minister. 'However, the state government, fearing a public backlash, has been deferring it. This time, therefore, the department suggested issuing licences only to liquor-manufacturing units.' Following the Sena's opposition, Ajit Pawar sought to change the proposal to offering one shop licence for each of the six revenue divisions of the state. This would mean about 360 new liquor shops. Although this was also opposed by Sena ministers, the proposal has not been cancelled but merely put on hold. The Valsa Nair committee has also recommended a slew of other measures to boost the liquor-manufacturing and consumption sector. It has recommended the adoption of several 'ease of doing business' measures such as doing away with stringent provisions such as the mandatory approval of a superintendent-rank officer for beer dispensers installed in permit rooms. It has recommended the promotion of wine, which right now sells a meagre 10 million litres per year in the total annual liquor sales of over 1,110 million litres. The committee has also recommended proper coordination between the excise and goods & services tax departments to plug the evasion of value-added tax (VAT). 'The GST department levies 10% VAT on the sale of liquor in permit rooms,' said an excise department official. 'Our department claims that the sales figures of permit rooms are underdeclared, leading to a VAT loss of 50% or ₹600 crore per year. The committee has recommended better coordination and sharing of the data of sales with the excise department to plug the evasion of VAT by permit rooms.'
