Duty hike: Beverage industry drowns in sorrow

BENGALURU: The 6% increase in the additional excise duty (AED) on all the 18 slabs of Indian Made Liquor (IML) in the state budget has not gone down well with the food and beverage (F&B) industry which is already reeling under economic meltdown and now, the health scare from the new coronavirus. “With 6% increase, alcohol is the new liquid gold in Karnataka!” exclaimed Byg Breweski and Bob’s Bar director Ajay Gowda.

“At these unaffordable prices, we won’t be surprised if people start looking for alternative stimulants like marijuana, becoming legal someday soon,” he remarked on a lighter vein.

“The increase in AED will generate an additional revenue of Rs 1,200 crore to the state excise (department). It will also help the department achieve the target of Rs 22,700 crore fixed for the 2020-21,” said a senior state excise officer.

This is the third hike in AED since 2018. The then Congress chief minister Siddaramaiah had increased the AED by 8% on all slabs with effect from April 1, 2018. In July the same year, the H D Kumaraswamy government had raised the AED by another 4%, with effect from August.

“There is huge pressure from the excise department on the licensees to lift more IML cases than beer. We were finding it difficult to sell the quantum of IML which the government wants us to sell. With the increased AED, the prices of hard liquor will further escalate,” said a club owner.

“The increased AED will make it even more difficult for excise licencees to sell hard liquor. I doubt if we will be able to pass the hike to our guests. We will have to sponge it off till there is some recovery in the economy. The food and beverage industry in Karnataka is already down by 20-30% in comparison to last year, because of market pressure and increased government regulations,” said the owner of a niche club and micro-brewery.

More revenue

The 6% increase is expected to generate revenue of Rs 1,200 crore. Beer has been spared as the previous government increased AED from 150% to 175 %, from 115% to 150% on draught beer.

Revenue target for the fiscal year 2020-21 is pegged at Rs 22,700 crore as against Rs 20,950 crore for 2019-20 and Rs 19,750 crore for 2018-19

Excise duty IML in Karnataka is Rs 50 per bulk litre (pbl) and AED Rs 153 pbl