Maharashtra Liquor Prices to Rise by 50% in 2025 Following Excise Duty Hike

In a move set to significantly impact the liquor industry in Maharashtra, the state government has approved a substantial hike in excise duty on various alcoholic beverages. The recent decision to raise the excise duty by 50% on Indian Made Foreign Liquor (IMFL), country liquor, and imported alcohol is poised to shake up the market and raise prices across the state. This hike, along with the introduction of a new category for Maharashtra Made Liquor (MML), is expected to contribute significantly to the state’s revenue base while simultaneously affecting consumers and the alcohol industry.

Excise Duty Hike: What Does It Mean for Consumers?
 

The excise duty on IMFL has been increased by a significant 50%, marking a shift from three times the manufacturing cost to 4.5 times, specifically for products with a manufacturing cost of Rs 260 per bulk litre. Country liquor will also see an increase, from Rs 180 to Rs 205 per proof litre. For consumers, this change translates into higher prices for alcohol across the board.

The impact on prices will be considerable. A 180 ml bottle of country liquor will now cost around Rs 80, up from the previous price of Rs 60–Rs 70. IMFL prices will also experience a steep rise, with prices expected to increase to Rs 205 from the previous Rs 115–Rs 130. Premium foreign liquor brands, which were already priced higher, will now see a rise of up to 50%, with prices expected to reach Rs 360 per bottle, up from the earlier Rs 210.

This hike is expected to increase the state's annual excise collection by approximately Rs 14,000 crore, a significant jump in revenue for the state government.
 

Introducing Maharashtra Made Liquor (MML)

In a bid to fill the pricing gap between country liquor and IMFL, the Maharashtra government has introduced a new category known as Maharashtra Made Liquor (MML). The aim is to create a local alternative that can compete with both country liquor and IMFL, while promoting the state’s agricultural and manufacturing sectors.

MML will be made from grain-based alcohol, and only products that are manufactured and registered within Maharashtra will qualify for this new category. This move is designed to boost local industries by encouraging the use of locally grown grains, benefiting farmers in the state. However, national or foreign brands will not be eligible to produce or sell under the MML category.

The newly established category will adhere to the same tax structure as country liquor and will only be sold through licensed outlets. The Maharashtra government estimates that the MML segment could generate up to Rs 3,000 crore in additional revenue, with a potential increase in production from the current 5-6 crore litres to 10-11 crore litres in the coming years.

The Effect on Local Manufacturers and Farmers

The introduction of MML is expected to breathe new life into the state’s alcohol manufacturing industry. Maharashtra currently has 70 licensed alcohol manufacturers, but 38 of them are inactive due to their inability to compete with established national and international brands. The MML category aims to address this gap, providing a new market for local manufacturers and allowing them to thrive by catering to the state’s demand for affordable, locally produced liquor.

The move is also expected to benefit local farmers, as the demand for grain-based alcohol is likely to increase. This could result in a boost for agriculture and local industries, providing a much-needed lifeline to farmers who have faced struggles with fluctuating market prices.

Industry Reactions: Concerns and Criticism

While the state government’s decision has been met with optimism by some, it has also drawn criticism from industry experts and local manufacturers. Pramod Krishna, the former Director-General of the Confederation of Indian Alcoholic Beverage Companies, expressed concerns over the steep tax hike, stating that Maharashtra already has one of the highest excise tax rates in the country.

Krishna warned that the increased tax rates could push consumers toward alcohol smuggling from neighboring states, where taxes are lower. This could hurt the local liquor industry, as high prices often lead to the black market thriving. The introduction of the MML category, while promising, may not be enough to counter the overall rise in alcohol prices in the state.

Looking Ahead: The Future of Liquor Pricing in Maharashtra

The Maharashtra government’s decision to hike excise duty and introduce MML is part of a broader strategy to increase state revenue and promote local industries. While the move is likely to have an immediate impact on alcohol prices, it remains to be seen whether the long-term benefits outweigh the challenges posed by higher taxation.

For consumers, the price hikes will undoubtedly be felt, but the availability of new options such as MML may help ease the burden. The focus now will be on how the state manages the implementation of these policies and whether the anticipated growth in local liquor production and revenue comes to fruition.

In conclusion, the Maharashtra government's decision to hike excise duty and introduce MML is a bold move aimed at reshaping the liquor market and boosting local industries. However, the reaction from consumers and manufacturers alike will determine whether the policy is ultimately a success or a failure in the long term.