• Total outstandings now stands at ₹3800 Crores (including ₹1959.72 Crores pending from May to Aug 2024)
• No response from Telangana government to October 25, 2025 letter by ISWAI, CIABC and Brewer’s Association of India
• Industry may not be able to supply as per the demand in December 2025, peak festival season

With the Congress-led Telangana government unable to clear huge dues of alcobev companies, the industry is faced with a major crisis. Leading industry associations of the alcoholic beverages industry, namely, the International Spirits and Wines Association of India (ISWAI), the Brewers Association of India (BAI) and the Confederation of Indian Alcoholic Beverage Companies (CIABC) have cautioned the government that the industry may not be able to supply as per the demand in December 2025, peak festival season, if dues are not cleared.

The stand-off between the alcoholic beverage industry and the Telangana government has turned serious. Companies including United Breweries, Heineken, Diageo, Pernod Ricard and Carlsberg say dues have piled up. Payments are coming in a staggered manner which is not helping the companies. The government’s silence is deepening the crisis. It is hurting production, procurement and supply planning. It is also testing the patience of an industry that contributes almost a third of Telangana’s own revenues.

Shortfall in Payments

In a joint press release, the three industry bodies said that “While the sales of alcoholic beverages and revenue collections shot up in October 2025 riding on festive demand, the payment to suppliers actually fell by almost 50% in the month of Oct’25 compared to what has been released in the past four months!.”

Payment received

July 2025	August 2025	September 2025	October 2025
₹697.82	₹614.62	₹1010.94	₹484.58

The release stated that the heads of the three associations, had repeatedly met senior government officials including the Deputy Chief Minister and the Excise Minister and were given assurances that “the state would commence releasing payments and clear old outstandings, especially for the period May 2024 to August 2024 which has been outstanding for over one year, on priority!

“However, despite the assurances, there has been hardly any progress in settlement of the outstandings. The three associations jointly wish to point out that the payments situation in October 2025 instead turned for the worse!. Whilst ₹484.58 Crore was released till 15 October 2025 which included ₹350 Crores for the period May 1st–May 15th 2024, there has been no payment released since then and as a result the total overdue outstandings now stands at ₹3800 Crores (including ₹1959.72 Crores for the period May to Aug 2024 )!!! It must be noted that the state has a contractual agreement to pay in 45 days which has been breached!!”

The press release signed by Sanjit Padhi, CEO, ISWAI; Anant Iyer, Director-General, CIABC; and Vinod Giri, Director-General, BAI said, “In their discussions and representations, had sought that the state use the application fees for new licenses to be issued in October 2025, amounting to ₹3000 Crores upwards, to pay the industry for supplies made earlier. Unfortunately, this has not happened and the Associations are concerned that the state government has not displayed any intent of paying for supplies and alleviating the financial plight of the alcobev sector in the state in spite of the fact that it is the largest contributor to the State’s tax revenue with contribution of over ₹38000+ Crores per annum to the state exchequer.”

The associations said that the new liquor retail licenses come into play in December 2025 which is during the peak festival season. The combination of stocking up by new licenses and the festive season is expected to increase the demand by retailers to 1.75 times the monthly average.

November 10 Deadline Passes

“However, most companies have pointed out that without immediate payment from the Government, they would not have money to meet this demand. This crisis can only be avoided if the State clears old outstandings by 10th November from the ₹3000+ Crores it has received from the application money. If the above does not happen then it is inevitable that the industry may not be able to supply as per the demand in December 2025.”

The November 10 deadline has passed and there has been no response from the Telangana government.

“The alocbev industry is hopeful that the state recognises the gravity of the situation and responds appropriately, failing which it would have created a crisis of its own making which would impact the entire ecosystem related to the alcobev sector such as loss of employment, closure of ancillary units and transportation and logistics services. Such a development would also have an adverse impact on ‘Brand Telangana’ and may affect future investments in the state not only by the alcobev sector, but also others who deal with supplies to the Government.”

On October 25, 2025, the associations in a joint letter to the Telangana Excise Minister, with copies to the Chief Minister Revanth Reddy; the Deputy Chief Minister; the Chief Secretary; the Excise Secretary and the Excise Commissioner, had urged them to resolve the issue at the earliest.

There has been no response to the October 25 letter. No public statement. No informal guidance. Industry executives say they have not received even an acknowledgment. This is unusual for Telangana, which has typically maintained steady communication with the sector. Companies say the silence makes planning impossible.

Prior to the October letter, the industry representatives had met the Deputy Chief Minister and the Excise Minister. In those meetings, the industry was assured that old dues would be cleared. The associations say those assurances have not translated into action.

Government ₹2,800 crore from the retail licence lottery

In the October 25 representation, the industry asked for three immediate steps. First, release all old payments pending since August 2024. Second, bring current outstanding down to the agreed 45-day cycle. Third, reduce advance excise duty to 1% to ease the working capital load. The associations said October offered a perfect opportunity to clear dues. The government had collected more than ₹2,800 crore from the retail licence lottery. This inflow, they argued, should have gone to settle longstanding arrears.

The letter also pointed to the sector’s importance. The alcoholic beverages industry generates more than ₹2,300 crore a month for Telangana. That is about 32% of the state’s own revenue. The associations warned that disruptions will hurt not only companies, but also the government’s finances. They urged the state to act quickly.

Cash Stress

The industry is now operating with severe cash stress. Payments to suppliers are delayed. Many packaging and raw material vendors have tightened credit. Breweries have slowed production. Distilleries are scaling back bottling runs. Sales teams are drawing up revised dispatch plans with lower allocations to Telangana. Companies say they do not want to reduce supply. But they also cannot carry the burden of unpaid dues for much longer.

Companies including United Breweries, Heineken, Diageo, Pernod Ricard and Carlsberg continue to face substantial pending dues, with industry estimates placing Diageo India’s outstanding payments at around ₹950–1,000 crore and Pernod Ricard’s at ₹1,400–1,500 crore. It may be mentioned that UBL had halted beer supplies to the state earlier this year over accumulated unpaid bills before resuming after discussions, while Pernod Ricard had also paused supplies earlier citing similar issues.

Beer Segment under Severe Strain

The beer segment is showing strain first. Breweries run on shorter cash cycles. They had planned higher output for the October to January season. Those plans are now on hold. Many breweries are shifting inventory to states where payments are on time. IMFL companies face similar challenges. Premium SKUs need expensive packaging and higher marketing spends and those plans are being deferred. Distilleries that operate across multiple states are prioritising markets with predictable cash flows. Telangana is slipping on that list.

Distributors say the pressure will soon hit retailers; allocation cuts will lead to shortages. Retailers depend on a full assortment. Gaps in top-selling brands push consumers to substitutes. Shortages also create price distortions. Retailers say the coming weeks could be volatile if payments do not resume soon.

Banks and rating agencies are also watching the situation. They have begun asking for details on receivables. Some companies are preparing to inform lenders formally about payment delays. This is usually a sign of deepening stress. It also sends a signal to the government that the issue is becoming visible outside the industry.

Industry Weighing its Next Steps

With communication stalled, the industry is weighing its next steps. Some legal advisers have suggested that a writ petition may be an option. Companies prefer to avoid legal escalation. They value the Telangana market and do not want confrontation. But the fact that legal options are being discussed openly shows how serious the crisis has become.

Inside companies, contingency planning is accelerating as CFOs are rationing cash. Procurement teams are warning vendors of possible payment delays. Vendors in turn are cutting credit. This is creating a chain reaction across the supply base. Transporters are asking for shorter credit cycles. Packaging suppliers are demanding partial advances. These pressures are likely to further slow production if dues are not released.

It will be determined soon whether the situation stabilises. If the government releases dues, the supply chain will recover quickly. If silence continues, the industry warns that a controlled slowdown will begin. Allocation cuts will follow. Retail shortages will spread. And Telangana will face a revenue dip driven not by demand conditions, but by administrative inaction.

Note

Telangana Excise Revenue @ ₹34,600 crores for FY24-25

The Telangana Prohibition and Excise Department reported a revenue of ₹34,600 crores for the 2024-25 financial year, marking a slight decline from ₹34,800 crores in 2023-24. Despite this, liquor sales saw a 7% increase compared to the previous year when excluding revenue from new liquor shop license applications.

In 2023-24, the department generated ₹264.50 crores from new liquor shop license applications. When this is excluded, the 2024-25 liquor sales demonstrated a 7% growth. The Excise Department’s tax revenue for the year was ₹7,000 crores. While beer sales decreased by 3%, from 54.8 million cases in 2023-24 to 53.1 million cases in 2024-25, this drop was attributed to a 15-day supply halt by beer companies and an increase in beer prices.

On the other hand, liquor sales showed a 2% increase, with 36.9 million cases sold in 2024-25, up from 36.2 million cases in 2023-24.

CM Admits State Struggling Financially

Telangana Chief Minister Revanth Reddy has admitted in the State Legislature that Telangana is struggling financially, as paying salaries on time has become a challenge. The Congress guarantees model, which helped win elections in Karnataka and Telangana, is now draining the treasury.

Here are some current freebies and schemes offered by the Telangana government:

Cheyutha Scheme: Provides free medical and healthcare up to ₹10 lakh for economically backward 

sections, including financial assistance of ₹2500 for women heads of households and free gas cylinders.

Gruha Lakshmi Scheme: Offers financial assistance of ₹ 2000 to women heads of households. 

Indiramma Saree Scheme: Distributes free sarees to eligible women from rural and urban areas. 

Free Scooty Scheme: Provides electric scooters to women aged above 18 years.

Mahalaxmi Scheme: Offers various financial benefits to improve the standard of living.