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Maharashtra liquor excise duty hike triggers market reaction
Maharashtra liquor excise duty hike has triggered a sharp reaction in the market, with liquor stocks plunging up to 5% after the state government announced a significant increase in excise duty on Indian-made foreign liquor (IMFL). This move, aimed at boosting state revenue, will see IMFL retail prices rise by over 60%, impacting both consumers and the liquor industry.
Details of the Maharashtra liquor excise duty hike
The Maharashtra government, facing fiscal pressures, has raised the excise duty on IMFL by more than 50%, a decision that is expected to reshape the state’s beverage market. The excise duty on IMFL will now be calculated at 4.5 times the manufacturing cost, up from the previous three times. As a result, the price of a 180 ml bottle of IMFL, which previously ranged from ₹120 to ₹150, will now start at a minimum of ₹205. Premium brands will see prices climb to at least ₹360 for 180 ml, up from ₹210–₹330. Country liquor will also see an increase, with 180 ml bottles now priced at ₹80 instead of ₹70.
Market impact of the Maharashtra liquor excise duty hike
The Maharashtra liquor excise duty hike is expected to have a ripple effect across the industry. Liquor stocks of major companies plunged up to 5% in response to the announcement, reflecting investor concerns about potential drops in demand and shifting consumer preferences. The government, meanwhile, anticipates that the hike will increase excise revenue to ₹57,000 crore in FY 2025–26, up from ₹43,620 crore last year. These additional funds are intended to support welfare schemes, including the Ladki Bahin initiative and subsidies for farmers.
Exemptions and new categories under the Maharashtra liquor excise duty hike
Notably, the Maharashtra liquor excise duty hike does not affect beer and wine. Officials explained that beer prices in Maharashtra are already among the highest in the country, and the state aims to promote wine production to benefit local grape farmers and wineries. Additionally, a new category—Maharashtra-made liquor (MML), produced from grains—has been introduced and exempted from the hike. MML will be priced at a minimum of ₹148 for 180 ml, strategically set to compete with IMFL and help revive defunct manufacturing units.
Industry and policy analysis: Maharashtra liquor excise duty hike
Industry experts believe that the Maharashtra liquor excise duty hike will not only affect IMFL brands but also shift consumer preferences toward exempted categories like beer, wine, and MML. Policymakers are closely watching the effects of the Maharashtra liquor excise duty hike on both revenue generation and consumer behavior. Some officials have also noted that the exemption for grain-based liquor may disproportionately benefit manufacturing units owned by politicians, raising questions about the policy’s intent and fairness.
Historical context and future outlook for the Maharashtra liquor excise duty hike
Historically, changes in excise duty have had a significant impact on both state revenues and drinking patterns in Maharashtra. Previous hikes have sometimes led to increased illicit liquor sales or cross-border purchases from neighboring states with lower taxes. With the current Maharashtra liquor excise duty hike, authorities are hoping to strike a balance between maximizing revenue and minimizing negative social consequences. The government has also promised to monitor the situation and make further adjustments if necessary to protect consumers and support the industry.
