Maharashtra Liquor Prices to Surge as State Hikes Excise Duty

 

          In a major policy shift aimed at boosting state revenues, the Maharashtra cabinet has approved a significant hike in excise duties on Indian-made foreign liquor (IMFL), country liquor, and imported premium liquor. This move is expected to substantially increase retail prices across liquor categories, triggering concern among consumers and industry experts alike.

On Tuesday, the cabinet endorsed a series of revenue-enhancing proposals from the state excise department. A key measure includes raising the excise duty on IMFL from the existing three times the manufacturing cost to 4.5 times. This represents a hike of over 50% in the duty structure and is expected to push retail prices of IMFL by more than 60%. A 180 ml bottle of IMFL, previously priced between ₹120 and ₹150, will now cost at least ₹205. Premium IMFL brands, currently ranging from ₹210 to ₹330, are projected to start at ₹360 for the same volume.

Imported premium liquor will also see a price increase of over 25%, while country liquor will become costlier by around 14%. The price of a 180 ml bottle of country liquor is now ₹80, up from ₹70. However, the excise duty on beer and wine remains unchanged. Officials cited Maharashtra’s already high beer prices and its pro-wine industry stance—given its substantial grape farming and winemaking ecosystem—as reasons for this exemption.

The government aims to raise an additional ₹14,000 crore through the revised liquor duties, pushing its excise revenue to ₹57,000 crore in FY 2025-26. This amount is expected to contribute around 10% of the state’s projected total revenue receipts of ₹5.60 lakh crore for the financial year.

To achieve this, the Mahayuti government had constituted a special committee in January 2025, headed by then Additional Chief Secretary Valsa Nair, to explore strategies for increasing revenue from the liquor sector. The committee submitted its recommendations in April, and they were approved by the cabinet on June 10.

A noteworthy addition is the introduction of a new liquor category called Maharashtra-Made Liquor (MML), produced from grains. This category will be exempt from the excise hike and will be priced competitively at ₹148 for 180 ml. The aim is to create a locally produced alternative that can compete with IMFL, potentially retaining price-sensitive consumers.

This is the first excise duty hike on IMFL in Maharashtra in 14 years. Despite the significant increase, state officials argue that Maharashtra’s new rates are still lower than those in neighboring states like Madhya Pradesh and Telangana. They also emphasized that the increase in duty on country liquor has been kept minimal to prevent a rise in the consumption of illicit liquor.

However, the move has drawn criticism from industry insiders. Pramod Krishna, former Director General of the Confederation of Indian Alcoholic Beverage Companies, expressed concern over the decision. Speaking to the Indian Express, Krishna said, “Maharashtra was already the most highly taxed state in this sector. This decision could worsen the scenario, encouraging smuggling from lower-tax states. It seems disconnected from ground realities and is not a sound economic step.”

While the government maintains the hike is essential to fund welfare schemes like Ladki Bahin and provide support to farmers and rural communities, the sharp price surge is likely to affect consumer behavior, especially among middle-income and lower-income segments.

The longer-term impact on consumption patterns, interstate smuggling, and the state’s revenue goals will unfold in the coming months as the new prices take effect. The industry will be closely watching whether the introduction of MML and selective exemptions can mitigate some of the adverse effects.