The Brewers Association of India (BAI), a body representing some of the country’s largest beer makers like AB InBev, Carlsberg, and the United Breweries (a Heineken company) has written to the Karnataka Excise Department requesting uniform rules on declared price (DP) rounding off to all beer suppliers in the state.
In a letter to P.C. Jaffer, the Secretary of Budget & Resources and MD KSBCL, Government of Karnataka, and R. Venkatesh Kumar, the State Excise Commissioner, Vinod Giri, BAI’s Director General, said, “We painfully point out that in recent times, we are witnessing an increasing amount of arbitrariness in beer regulation in the state which is threatening the industry growth as is evident from the recent trends in beer sales in the state. We pointed out two issues repeatedly, namely the frequent increase in taxes on beer which is putting beer out of reach of most consumers, and arbitrary mandates related to labels which is making producing in Karnataka increasingly difficult. Our pleas, despite being substantiated by data, have not been headed to, making our members rethink their investments in the state.”
Giri alleged that rules seem to be not applied uniformly to all suppliers. The Karnataka Excise department, in August 2024, brought about an amendment due to which a rule was amended to allow any price increase to suppliers (declared price) upon submission of an affidavit that the new DP in the range of plus 10 per cent of the lowest DP offered for the brand in the neighbouring states.
Additionally, the modification introduced a concept of rounding off the DP to nearest ₹5. Following this, the Government brought out notifications mandating changes in beer labels, and taxes on beer, requiring the beer suppliers to apply for fresh DP or MRP.
“Aligning with the two amendments, our members companies applied for price revision for their brands selling only in Karnataka and thus, not subject to comparison with neighbouring states, to round off the DPs while keeping the MRPs same. However, despite being fully compliant with the provisions of the Excise rules and the amendments along with the supporting documents, their applications are yet to be approved,” Giri alleged.
He claimed that another beer supplier, a Madhya Pradesh-headquarted company, applied for similar price revision to round off the DP using the same grounds, and got their application approved.
The Director General said that the BAI is unclear about the grounds on which the other application was approved, whilst those of its member companies were put on hold.
“Our member companies, among the biggest investors and contributors to the State Government’s revenues, feel aggrieved and discriminated against. Hence, they directed me to seek your urgent intervention in ensuring a level playing field for all beer suppliers in the state,” he said in the letter, urging the excise department to remove the “discrimination” against BAI’s member companies and other beer producers, and approve their applications for price revision with respect to rounding off in the DP.
Giri noted that the member companies together account for 85 per cent of the beer sold in India. They also operate over 55 breweries worth Rs 25,000 crores in investment, and employing over 27,000 people, creating a massive economic impact through farmers, ancillary units, transport and warehousing business, and the hospitality sector.
The members companies also account for the majority of beer sold in the state and are major contributors to the state’s revenues.
The BAI representative shared that beer contributes significantly to the Government tax revenues in the state. While it accounts for only 8 per cent of the alcoholic beverages sold in the state, 16 per cent of the tax revenues comes from the sector. Further, this share has risen from 11 per cent five years ago. This was made possible by a stable policy environment in the state which allowed the industry to grow and contribute.