Stories
Liquor Stocks Surge as Karnataka Proposes New AIB-Based Tax Policy
- •Shares of liquor companies including United Breweries, Radico Khaitan, and Tilaknagar Industries rose up to 3% following Karnataka's new draft alcohol policy.
- •Karnataka is set to become the first state in India to introduce an alcohol-in-beverage (AIB) based excise duty structure, taxing products based on actual alcohol strength.
- •The phased tax overhaul will increase prices for cheaper liquor slabs while reducing costs for premium alcohol like Scotch and mild beer.
- •Brokerage firm Nuvama views the policy change as a positive driver for volume growth, citing lower taxation on premium spirits and potential UK FTA tailwinds.
Key Questions Answered
Karnataka has become the first state in India to implement an alcohol-in-beverage (AIB) based excise duty system, which calculates taxes based on the actual strength of alcohol in a drink rather than total volume or old pricing slabs. Under this policy introduced on May 11, 2026, Indian Made Liquor (IML) slabs have been reduced from 16 to 8. Higher alcohol content products face higher taxes while premium spirits and mild beer may see lower prices.
The new tax regime increases retail prices for the cheapest mass-market Indian Made Liquor with high alcohol content, while bringing down costs for premium spirits like imported Scotch and potentially lowering taxes on mild beer. Additionally, the policy completely deregulates government-administered price fixation, allowing producers to set product placement and pricing based on market demands.
Following the release of the draft notification amending the decades-old alcohol taxation policy, shares of liquor companies such as United Breweries, Radico Khaitan, and Tilaknagar Industries rose by up to 3% on April 20. Brokerage firms viewed the policy as a positive development that will drive volume growth and cool off spirits prices due to lower taxation.
