Tax hikes slumping beer sales in Karnataka

The beer industry has approached the Karnataka government to halt any further tax hikes on beer, cautioning that such moves could lead to declining sales volumes and place over ₹5,000 crore in brewery investments at risk.

In a letter to the state government, the Brewers’ Association of India (BAI) highlighted that taxes on beer have been raised three times in the past 18 months—first in July 2023, then in February 2024, and most recently in January 2025. In February 2024, the additional excise duty on beer was increased from 185 to 195 percent, followed by a hike of ₹10 per bulk litre (or ₹78 per case) in January 2025. These have caused sales growth in the state, historically strong, to slump into stagnation. BAI Director-General Vinod Giri noted that after the latest tax increase, beer sales began contracting for the first time.

BAI, which represents India’s largest beer makers including United Breweries Ltd., AB InBev, and Carlsberg—who together command 85 percent of India’s beer market—said that the repeated tax hikes have not only slowed industry growth but also reduced government revenue.

The association also underlined that steep pricing may drive consumers toward cheaper alcoholic options, further denting government earnings. In 2023–24, the beer industry contributed over ₹5,500 crore to Karnataka’s tax revenue. Despite accounting for only 8 percent of alcoholic beverage sales in the state, beer contributed 16 percent of the excise revenue, up from 11 percent five years ago. Karnataka has been a key hub for beer companies, with more than 10 breweries more than any other Indian state and investments from BAI members totalling ₹3,500 crore. The industry fears that continued fiscal pressure could threaten this position and erode long-term investor confidence.