Karnataka to end alcohol price controls from April 2026, introduce strength-based excise system
Karnataka plans to remove alcohol price controls and introduce a strength-based excise duty system from April 2026, giving producers more pricing freedom in one of India’s largest liquor markets.
INDIA – The government of Karnataka has announced plans to remove alcohol price controls starting in April 2026, introducing a new taxation framework that will allow producers greater flexibility in setting prices for alcoholic beverages.
The announcement was made by Chief Minister Siddaramaiah during the presentation of the state budget, outlining major reforms aimed at modernising the liquor taxation system in one of India’s largest alcohol markets.
Under the new framework, the government will implement an alcohol-in-beverage-based excise duty structure that taxes alcoholic drinks according to their strength.
The move will also expand pricing categories from eight to sixteen and enable manufacturers to determine their own retail prices rather than seeking state approval.
The reform marks a major shift from the long-standing system under which the government determined final retail prices after manufacturers declared ex-factory prices.
Officials said the new model will allow greater price flexibility in the market, which could influence international brands operating in the state, including Pernod Ricard, Anheuser-Busch InBev, Carlsberg and Diageo.
According to the state government, the changes will be implemented gradually to allow industry players and the market to adjust to the new system.
“The new excise framework will be implemented in phases over the next three to four years to ensure gradual adjustments in the market,” Siddaramaiah said.
Liquor taxation remains one of the largest sources of revenue for the state government. In the latest budget, the government has set an excise revenue target of Rs 45,000 crore for the 2026–27 financial year.
As part of the reforms, the excise department also plans to introduce technology-driven monitoring systems to improve transparency and reduce revenue leakages.
These measures include blockchain-based digital tracking systems and geo-fenced electronic locks for monitoring the movement of liquor consignments during transportation.
The government also announced plans to promote alcohol tourism by allowing distilleries and breweries to conduct tasting sessions and sell their products directly to visitors at their premises.
India remains a major global alcohol market, ranking as the world’s eighth largest with annual revenues estimated at about US$45 billion. However, alcohol regulation and pricing structures vary widely across the country’s states.
Industry stakeholders have expressed mixed reactions to the proposed changes.
Amant S Iyer, Director General of the Confederation of Indian Alcoholic Beverage Companies, said the new framework could create challenges for certain segments of the industry.
“If duty slab rationalisation is accompanied by an increase in duty in slabs 1 to 4, which constitutes approximately 85–90% of spirits sales in Karnataka, such an increase will lead to a further drop in sales in these slabs and adversely impact revenue in the medium term,” Iyer said.
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