Diageo, Pernod Ricard File Lawsuit Against Maharashtra's Liquor Tax Hike Policy

As per Reuters, Global liquor majors Diageo and Pernod Ricard have taken legal action against the state of Maharashtra, contesting a sharp excise duty increase and their exclusion from a newly introduced lower tax category, pointing to discrimination favouring local firms with no foreign investment. 

Why Diageo and Pernod Ricard Are Challenging the Maharashtra Policy 

Between June and August, Maharashtra introduced a policy that raised taxes from 300% to 450% on affordable liquor brands with production costs under ₹260 per litre. Simultaneously, a new category called “Maharashtra Made Liquor” was created, taxing only 270%—but eligibility is restricted to firms headquartered within Maharashtra without any foreign investment.  

Diageo and Pernod Ricard, through their Indian lobby group, argue this is discriminatory and creates unfair competitive advantages for certain domestic players. 

Impact on Market and Sales Volume 

Maharashtra contributes 7% of India’s premium liquor consumption, with Mumbai being a vital urban market for international brands. According to industry data, brands affected by the hike—like Diageo’s McDowell’s and Pernod’s Royal Stag—have seen sales decline 35% to 40% since the revised tax structure was implemented.  

This serious drop in sales hits a significant revenue stream for these multinational firms. 

Read More: RBI Governor Hints at Scope for Further Rate Cuts as Inflation Drops to Record Low! 

Lawsuit and Arguments from the Industry 

The International Spirits and Wines Association of India (ISWAI), which represents the interests of these firms, filed a petition on November 14, urging the Mumbai High Court to either strike down the policy or allow foreign-funded companies to also qualify for the 270% tax rate.  

ISWAI termed the current framework as creating “artificial competitive advantage” in favour of select firms. The court is scheduled to hear the matter on December 9, 2025. 

Government’s Perspective and Revenue Goals 

The Maharashtra government has stated publicly that this policy would boost local investment, enhance factory utilisation, and result in annual additional revenue of $1.56 billion. However, it did not directly respond to concerns raised by the global companies, or the legal plea filed against the policy. 

Conclusion 

The lawsuit filed by Diageo and Pernod Ricard highlights rising tensions between state policy favouring local industries and global companies seeking equal treatment. As the case nears its hearing date, the outcome could set a precedent for foreign players in India’s regulated liquor market. 

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