The Brewers Association of India (BAI) has officially requested that the Karnataka government reconsider its draft regulations, which suggest a significant tax increase based on alcohol content classification. Representing leading beer producers across the country, the BAI cautioned that these proposed changes could adversely affect both the industry and the state’s tax revenues.
In August, the Karnataka government circulated a draft notification to industry stakeholders, inviting feedback on the suggested revisions to beer regulations. The proposals include mandatory labeling of malt and sugar content on beer packaging, increased taxes on strong beer, and a statewide rise in minimum beer prices. Additionally, the draft outlines stricter production standards, limiting sugar content to 25% and requiring detailed content labeling.
Vinod Giri, director general of BAI, emphasized that “beer contains no sugar by standard definition,” pointing out that India already has an established classification for beer under the Food Safety and Standards Authority of India (FSSAI). He further expressed concerns about the proposed labeling requirements, stating, “Current beer labels are already populated with statutory information and warnings. Adding unnecessary details would clutter the label, making it less appealing to consumers.”
Giri also criticized the lack of justification for the proposed changes. “While the government has listened to our arguments, it hasn’t provided substantial reasoning behind the proposed alterations,” he remarked.
The draft notification proposes substantial tax increases, including a doubling of the excise duty on strong beer—defined as having an alcohol content between 6.5% and 8%—raising it to Rs 20 per litre. The minimum price per case of beer would increase to Rs 300, and the Additional Excise Duty (AED) would rise to 195% of the billing price or Rs 130 per bulk litre, whichever is higher.
Giri warned that these changes could lead to steep price hikes for consumers, predicting that the minimum price per bottle of strong beer would jump from Rs 95 to Rs 140. He noted that this marks the third tax increase on beer in just 15 months, an unprecedented trend that may render beer prices uncompetitive compared to hard liquor. “This could encourage consumers to gravitate toward stronger alcoholic beverages, contradicting health guidelines from organizations like the WHO,” he added.
The BAI contends that the proposed tax hikes could trigger a decline in beer sales, encourage cross-border smuggling, and ultimately diminish the state’s tax revenue. With more than 11 breweries, significant investments totaling thousands of crores, and employment for around 7,500 people, Karnataka has established itself as a key player in beer production. However, the BAI warns that the new policies could hinder industry growth, deter future investments, and compel companies to seek opportunities in other regions.
In light of these concerns, the BAI is urging the Karnataka government to rethink the proposed amendments, advocating for regulations that promote public health while fostering sustainable growth within the beer industry.
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