In a major shift from its decades-old liquor pricing system, the Karnataka government has announced it will stop fixing retail prices of alcoholic beverages from April 2026, allowing manufacturers greater freedom to determine prices in one of India’s largest alcohol markets.
Chief Minister Siddaramaiah made the announcement during the presentation of the state budget for 2026–27. The government will also introduce an alcohol-in-beverage (AIB) based excise duty structure.
“Excise duty will be linked to the alcohol content in beverages by introducing an alcohol-in-beverage-based taxation system,” Siddaramaiah said in his budget speech.
Under the new framework, the government will discontinue its practice of fixing maximum retail prices for beer and liquor. Instead, manufacturers will be allowed to set their own product prices without seeking state approval. The number of price slabs will also be reduced to eight from the current 16.
Currently, the state operates a controlled pricing regime where alcohol manufacturers declare ex-factory prices, and the government determines the final retail price.
The reform marks one of the most significant changes to the state’s liquor policy in years. The new excise structure will be implemented in phases over the next three to four years to allow gradual market adjustments.
Home to a technology hub, Bengaluru is among India’s most lucrative alcohol markets, driven by a large base of young professionals and a multinational workforce that fuels demand for premium brands from global drinks makers such as Diageo, Pernod Ricard, Anheuser-Busch InBev and Carlsberg.
Following the policy announcement, shares of several alcohol companies rose. United Spirits, owned by Diageo, jumped 5.4%, while United Breweries, backed by Heineken, gained 2.6%. Other Indian alcohol makers, including Tilaknagar Industries and Radico Khaitan, also saw gains.
India is the world’s eighth-largest alcohol market, generating about USD 45 billion in annual revenue, with each state maintaining its own regulations and pricing structures.
Liquor taxes remain a major revenue source for Karnataka, with the government setting an excise revenue target of Rs 45,000 crore for 2026–27.
To curb leakages and improve monitoring, the Excise Department plans to introduce technology-driven tracking systems, including blockchain-based digital monitoring and geo-fenced e-locks for transporting liquor consignments.
The government also plans to promote alcohol tourism by allowing distilleries and breweries to conduct tasting sessions and sell products at their premises for visiting tourists.