Shares of breweries and distilleries rose as much as 9 per cent on the National Stock Exchange (NSE) on Friday, before closing about 8 per cent higher in an otherwise weak market. The gains come after the Karnataka government announced a major overhaul of its six-decade-old excise policy, and shifted to a global taxation standard, with complete deregulation of alcohol pricing. 

Presenting his 17th Budget, Karnataka Chief Minister Siddaramaiah introduced the Alcohol-in-Beverage (AIB) excise duty structure. Starting April 2026, taxes will be levied based on actual alcohol content rather than total volume. This transition will be phased in over the next three to four years to avoid market disruption. 

Under the proposed reforms, government-administered price fixation will be deregulated, allowing producers to place their products within pricing slabs, based on market considerations instead of seeking government approval. Moreover, the total number of price slabs for alcoholic beverages will be rationalised from 16 to eight. 

While technology-led steps will be taken to prevent the government’s revenue loss from the sector, measures towards ease of doing business, including auto-renewal of manufacturing licences among others, are also to follow. 

The announcements are important and seen in positive light for the alcobev industry, as Karnataka is among the top consuming states of liquor, brandy and beer in the country, and also among the heavily regulated and taxed. 

The state government also plans to promote tourism linked to the alcohol industry, by allowing distilleries and breweries to conduct tasting sessions and sell products manufactured on their premises to visiting tourists. 

In an update on the alcoholic beverages sector, Emkay Global Financial Services said that the tax hikes in the state Budget have been relatively low, against expectations of sharp hikes, given that the state government needs to fund social welfare schemes. 

Amid state Budgets announced so far, Uttar Pradesh (UP) remains a progressive state, with policy changes in the state Budget aligned to boost consumption and develop opportunities in the state. While beneficial for all players through increased transparency, Radico Khaitan stands as the primary beneficiary of regulatory shifts in its fortress state, Emkay Global Financial said. 

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