Hyderabad: The Confederation of Indian Alcoholic Beverage Companies (CIABC) has asked the Telangana State Government to allow a price increase for alcoholic drinks. The group says rising costs across the board are hurting the industry, and there is no regular system to adjust prices each year.
Anant S Iyer, Director General of CIABC, explained that the cost of making liquor has gone up significantly since the last price update in May 2023. Prices for key raw materials like Extra Neutral Alcohol (ENA), malt spirit, bottles, and labels have all shot up. In addition, companies are paying more for labor, transport, and services.
To deal with this, the CIABC submitted a proposal asking the government to link price changes with the Wholesale Price Index (WPI). This would allow regular adjustments based on actual inflation. Iyer said that without this system, liquor companies are being squeezed. The government continues to raise taxes, but companies aren’t getting enough of the revenue to cover their growing costs.
Iyer pointed out that the government keeps more than 70% of the Maximum Retail Price (MRP) on each liquor bottle. Manufacturers only receive about 12–15%, while retailers take around 15–18%. As a result, most of the money from liquor sales goes to the government, while producers struggle to keep up with higher costs.
Another major problem is that the liquor industry is outside the Goods and Services Tax (GST) system. Because of this, alcohol companies can’t claim Input Tax Credit (ITC) on the taxes they pay for raw materials. This adds another 3–5% to their production costs, according to CIABC.
To stay afloat, the industry is asking for a price increase of ₹100–₹200 per case for Indian Made Foreign Liquor (IMFL) and a 5% hike for wine products.
The CIABC also raised concerns about delayed government payments. As of now, companies are owed about ₹2,800 crore, with a growing interest burden of ₹400 crore on these overdue payments.
The association says that without fast action, the current situation could damage the sector’s ability to grow and invest in the future.
