Liquor Industry Warns Maharashtra’s Record IMFL Duty Hike

The Confederation of Indian Alcoholic Beverage Companies (CIABC), representing key players in the liquor industry, met with Maharashtra’s excise department on Monday to voice concerns over the recent sharp increase in duties on Indian Made Foreign Liquor (IMFL). The state government had announced a hike of 50% to 60% last week—the steepest in percentage terms since 2011.

Industry Urges Rollback Amid Fears of Revenue Decline

CIABC strongly appealed to the government to reconsider the hike, cautioning that the measure could backfire economically. Rather than boosting state revenues, the group warned the move may shrink overall alcohol sales due to reduced consumer demand triggered by higher prices.

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Retail Prices Expected to Soar 30% to 50%

With the new duty structure in place, the Maximum Retail Price (MRP) of IMFL is expected to rise significantly, by as much as 50% in some cases. CIABC predicts that such a sharp price increase will likely deter buyers, especially in price-sensitive segments of the market.

Impact on Liquor Companies and Market Sentiment

Publicly listed liquor companies like United Spirits Ltd (USL) and Radico Khaitan Ltd, both of which have a strong presence in Maharashtra, are expected to feel the pinch. Analysts estimate the potential earnings per share (EPS) impact of 6% to 8% for USL and 2% to 3% for Radico Khaitan. Despite these concerns, shares of USL and Radico Khaitan were trading modestly higher at 2 pm IST, up 2.3% and 0.5%, respectively.

Illicit Trade and Smuggling Risks on the Rise

CIABC also flagged a serious concern over unintended consequences: a potential surge in the consumption of illicit or non-regulated alcohol. They warned that consumers could turn to cheaper, unregulated sources or smuggle products from neighbouring states where alcohol duties are lower, thereby undermining both public health and revenue targets.

State Government Justifies Hike as Revenue Measure

In response, the Maharashtra government has stood by its decision, stating that the increase is aimed at generating additional revenue for the state’s coffers. However, CIABC insists that the policy may do more harm than good if it disrupts the legitimate supply chain and pushes consumers toward unsafe alternatives.

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