Maharashtra: Country, imported premium liquor prices to soar as cabinet approves excise duty hike on IMFL

On Tuesday, the Maharashtra cabinet approved several revenue-enhancing measures in the excise department, including an increase in liquor duty. The state excise duty on Indian-made foreign liquor (IMFL) soared by more than 50%, leading to a significant rise in retail prices by over 60%. It has also hiked the duty on country liquor and imported premium liquor, which will increase their retail prices by 14% and over 25% respectively, HT reported.

However, the excise duty on beer and wine has not risen as the retail price of beer, which has a lesser percentage of alcohol in comparison to hard liquor, is among the highest in the country, officials said. When it comes to wine, the state follows a policy of promotion, as Maharashtra is home to a large portion of the country’s wineries and a significant number of grape-supplying farmers are based in the region, the report stated.

The government anticipates that the substantial hike will boost its revenue to ₹57,000 crore, an increase of ₹14,000 crore from the ₹43,620 crore collected in FY 2024-25. It expects this to contribute 10% of the projected ₹5.60 lakh crore in total revenue receipts for the 2025-26 financial year.

In an effort to generate revenue to support the strained exchequer and fund populist schemes like Ladki Bahin, along with benefits for farmers and other communities, the Mahayuti government formed a committee in January, led by then Additional Chief Secretary Valsa Nair, to suggest ways to boost liquor revenue. The committee submitted its report in April, and the state cabinet approved its recommendations on Tuesday, the report added.

The price change in IMFL

Following the committee’s recommendations, IMFL will now be subject to an excise duty that is 4.5 times the manufacturing cost, up from the current rate of three times. An IMFL official told HT, “This will vary based on the manufacturing price but could lead to a huge hike of over 60% in retail prices.”

Currently priced between ₹120 and ₹150 for 180 ml, the cost of IMFL will now rise to a minimum of ₹205. Premium brands, which currently range from ₹210 to ₹330 for 180 ml, will now start at ₹360. Meanwhile, the price of a 180-ml bottle of country liquor has increased from ₹70 to ₹80.

The government has introduced a new category called Maharashtra-made liquor (MML), which will be exempt from the duty hike. Made from grains, MML will be priced at a minimum of ₹148 for 180 ml, a rate deliberately set within the current IMFL price range to help MML compete with and capture a share of the IMFL market.

The excise duty hike on IMFL brands is the first in 14 years. Officials noted that, despite the increase, the duty remains lower than in neighbouring states such as Madhya Pradesh and Telangana. Another official pointed out that the duty increase on country liquor was kept minimal to prevent a shift towards illicit alcohol, as a sharper rise in price could drive such consumption. “It is also because the last hike was done in 2022,” he stated.

Expert weighs in

“Maharashtra was the most highly taxed state in the country in terms of this industry. The new decision is likely to make the situation worse. High prices in a particular state leads to the smuggling of alcohol from less taxed states or from neighbouring states. At the look of it, I think this decision is far from ground reality and not a good decision,” Indian Express quoted Pramod Krishna, former Director General, Confederation of Indian Alcoholic Beverage, as saying.