In a move set to significantly impact liquor prices across Maharashtra, the state cabinet on Tuesday approved a hike in excise duty on Indian Made Foreign Liquor (IMFL), country liquor, and imported alcohol. The government also cleared the introduction of a new category Maharashtra Made Liquor (MML) in a bid to expand the state’s revenue base.

The excise duty on IMFL has been increased by 50 per cent from three times the manufacturing cost to 4.5 times, specifically affecting products with a manufacturing cost of Rs 260 per bulk litre. The duty on country liquor has also gone up from Rs 180 to Rs 205 per proof litre.

The decision is expected to raise the state’s annual excise collection by approximately Rs 14,000 crore. Prices of IMFL and premium foreign liquor brands are likely to increase by at least 50 per cent, officials said.

A 180 ml bottle of country liquor will now cost a minimum Rs 80, up from Rs 60–Rs 70, while IMFL prices will rise to Rs 205, up from Rs 115–Rs 130. Premium foreign liquor may now cost Rs 360, up from Rs 210.

This is the first revision of excise duty in Maharashtra since 2011.

The state also approved a policy allowing liquor vending (FL-2) and on-premise sale (FL-3) licence holders to operate on lease with an additional 15% and 10% of the annual licence fee, respectively.
The newly announced Maharashtra Made Liquor (MML) category aims to fill the pricing gap between country liquor and IMFL. It will be made from grain-based alcohol, and only products manufactured and registered within the state will qualify. National or foreign brands will not be eligible for inclusion.

MML will have a country liquor tax structure but will only be sold through FL-2 and FL-3 licensees. The government estimates the current size of this segment at 5–6 crore litres, which could potentially grow to 10–11 crore litres, generating up to Rs 3,000 crore in additional revenue.

Officials also claimed the move would benefit local farmers by raising demand for grain.
“Maharashtra has 70 licensed alcohol manufacturers, but 38 are currently inactive as they can’t compete with established foreign brands,” a senior excise department official said. “MML is intended to revive these units and promote local industry.”

Experts from the alcoholic beverage industry have expressed concern over the steep tax.
“Maharashtra was the most highly taxed state in the country in terms of this industry. The new decision is likely to make the situation worse. High prices in a particular state leads to the smuggling of alcohol from less taxed states or from neighbouring states.

At the look of it, I think this decision is far from ground reality and not a good decision,” said Pramod Krishna, former Director General, Confederation of Indian Alcoholic Beverage Companies.