ISWAI flags revenue risks over new liquor category

Maharashtra's new liquor policy raises IMFL taxes and introduces Maharashtra-Made Liquor, sparking concerns of illicit sales and revenue loss, warns ISWAI.

The Maharashtra government’s recent decision to introduce a new liquor category—Maharashtra-Made Liquor (MML)—and simultaneously hike excise duties on Indian Made Foreign Liquor (IMFL) has sparked concern from the International Spirits and Wines Association of India (ISWAI).

However, ISWAI has warned that the decision could have unintended consequences—including a rise in illicit liquor sales, reduced state revenue, and heightened public health risks. (REPRESENTATIVE PIC)

The policy change, announced on June 10 following recommendations from a committee headed by then additional chief secretary Valsa Nair, shifts the excise duty on IMFL from the current rate of three times the manufacturing cost to a higher rate directly tied to the manufacturing cost. The move is intended to boost state revenue from liquor sales.

However, ISWAI has warned that the decision could have unintended consequences—including a rise in illicit liquor sales, reduced state revenue, and heightened public health risks.

The MML category, announced by the state excise department [on date], aims to promote locally produced, grain-based spirits. Only local manufacturers will be permitted to produce MML, and they must register new brands under this classification. Priced between ₹150 and ₹205 for a 180 ml bottle, MML is expected to replace IMFL in the lower price range, as IMFL brands are pushed into the ₹205-plus segment under the revised tax structure.

ISWAI raised several red flags. Since production capacity for MML could take at least six months to scale up, the association warned of a potential market vacuum, leading to reduced tax collections and an increase in unregulated alcohol sales.

“The proposed excise duty hike will have negative implications for the premium spirits industry, revenue sustainability, and consumers,” said Sanjit Padhi, CEO of ISWAI.

“It will undermine the government’s revenue objectives by prompting consumer downgrading, illicit liquor consumption, and cross-border smuggling from neighbouring states, resulting in revenue losses for Maharashtra. ISWAI has urged the government to reconsider the hike and adopt a more gradual, calibrated approach,” Padhi added.

The association also pointed to similar policies in other states that failed to sustain long-term growth, cautioning Maharashtra to learn from those experiences. ISWAI members account for over 45% of India’s liquor volume and more than 55% of its value. With more than 95 manufacturing plants nationwide, they represent some of the largest investors in India’s spirits sector.

While beer and wine have been exempted from the excise hike, MML will also be spared, giving it a pricing advantage. MML products, made from grains, will start at ₹148 for 180 ml, a price strategically aligned with the current IMFL range to help MML capture that market. The revised tax structure is expected to increase IMFL retail prices by up to 65%, with a 180 ml bottle likely to cost ₹100– ₹130 more. Experts fear this could dampen IMFL demand, thereby reducing the need for grain-neutral spirit (GNS)—a key input sourced from rural farmers.

ISWAI also warned that ancillary industries such as packaging, bottling, and logistics—many dominated by MSMEs—could face setbacks from reduced consumer spending. The hospitality and tourism sectors may also feel the ripple effects. Additionally, the association cautioned that the wide price disparity with neighbouring states like Goa and Madhya Pradesh could spur cross-border smuggling.

“If not calibrated properly, this policy could hurt both state revenues and consumer welfare,” ISWAI said in a statement.