Prices of IMFL products expected to increase by up to 65%

In the wake of the current increase in excise duty on Indian Made Foreign Liquor (IMFL) by the Maharastra government, International Spirits and Wines Association of India (ISWAI) has raised strong apprehensions over the government’s recent decision The announcement has triggered concern amongst the stakeholders in the industry with prices of IMFL products expected to increase by up to 65%. For instance, the price of a 180 ml bottle can now be expected to increase by ₹100–130, something that is already doing rounds by consumers on social media. ISWAI and industry experts anticipate this increase having far-reaching economic and social consequences.

Currently the alcobev industry contributes ₹23,290 crore annually to the Maharastra Government, which has seen a robust 11% CAGR in total revenues and a 35% CAGR in the premium segment between FY20 and FY24. The industry stakeholders feel that this might derail this momentum and ISWAI is urging an urgent review of the new policy. 

Although the review seems unlikely since the new FTA between UK-India have brought down the imported liquor duty from 150% to 75% initially. 

Sanjit Padhi, CEO, ISWAI, said, “This unprecedented hike is likely to push consumers towards cheaper alternatives, including unregulated and potentially unsafe liquor.” Coupled with the high arbitrage with neighbouring states, this raises the risk of market infiltration by illicit products, posing a serious public health threat and undermining consumer safety he added.

This can also have more far etching implications according to ISWAI. Some of which include:

• A potential decline in IMFL volumes may reduce demand for grain-neutral spirit (GNS), adversely affecting rural grain-supplying farmers
• Likely downward trade for consumers to lower-end or cheaper products
• This will impact expected incremental revenue to the government will be marginalised
• Workforce rationalization at manufacturing units could result in job losses
• Significant disruptions of ancillary sectors like logistics, packaging and bottling
• Reduced footfall and revenue in bars and restaurants

There is a heightened risk of unintended consequences, including a surge in the consumption of illicit liquor and cross-border smuggling, particularly from neighbouring states like Goa and Madhya Pradesh, driven by the significant price arbitrage. This infiltration could severely impact both revenue collections and public safety.

ISWAI is also cautioning that the recent price hike may undermine the government’s revenue objectives by fueling non-compliance and expanding the illicit trade network. Rather than generating higher tax collections, the move could result in revenue leakages, as consumers turn to unregulated and untaxed sources of alcohol.

While the government has introduced a new category – Maharashtra Made Liquor (MML) – targeted at the ₹150–205 price range for 180ml, this segment is being vacated by existing IMFL brands, which are moving up to the ₹205+ bracket. However, with MML production expected to take over six months to ramp up, the interim period is likely to create a market vacuum, leading to potential revenue losses for the state.

“A balanced policy will not only ensure steady revenue inflow but also safeguard the interests of stakeholders across the value chain,” adds Sanjit Padhi. The industry, while supportive of reform, advocates a sustainable and revenue-positive model that balances fiscal goals with market realities.