Expressing concern over the increase in the excise duty on Indian made foreign liquor (IMFL) by up to 50 per cent by the Maharashtra government, the Confederation of Indian Alcoholic Beverage Companies (CIABC), the apex body of the Indian Alcoholic Beverage Industry, has urged the state government to reconsider the hike and hold deliberations with all stakeholders immediately.
Sources in the excise department said the industry body was trying to protect its interest, but declined to comment on any possibility of a rollback.
The state cabinet on Tuesday approved a hike in excise duty on IMFL, country liquor, and imported alcohol.
The decision is expected to raise the state’s annual excise collection by approximately Rs 14,000 crore as the prices of IMFL and premium foreign liquor brands are likely to increase by 50-80 per cent.
The CIABC claimed that while the intent behind the proposed hike may be to enhance revenue collections by Rs 14,000 crore, the actual outcome may be contrary–driven by declining sales, rising illicit trade, and border leakages.
The long-term impact could be deeply detrimental, not only for industry and employment, but also for public safety and overall state revenues.
Stating that the CIABC had already written to the Maharashtra government urging it to start a consultative process with all stakeholders before releasing any final gazette notification, Anant S Iyer, Director-General, CIABC, said the hike in excise duty was projected to push maximum retail prices up by as much as 85 per cent, a step that could severely disrupt the market, erode the competitiveness of national brands, and jeopardise the availability of legitimate alcoholic beverages in the state.
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“Such an unprecedented escalation in duties poses a serious deterrence to consumer access of established and reputed brands, compelling a shift toward lower-category products. This poses a serious threat to the stability of the IMFL industry in the state…such a move will have a far-reaching adverse impact,” Iyer said. He warned that higher MRPs often create a vacuum filled by illegal operators.
The IMFL industry contributes approximately 60 per cent of the total excise revenue of the state.
