The Confederation of Indian Alcoholic Beverage Companies (CIABC) has cautioned that the proposed changes to Karnataka's excise policy should not favor any specific category of alcoholic beverages. The industry body emphasized that any reform must maintain a level playing field across all segments, including beer, wine, and spirits.
CIABC's Stance on Proposed Changes
In a statement issued on Sunday, CIABC director general Vinod Giri said, "While we appreciate the government's efforts to modernize the excise regime, it is crucial that the new policy does not create an uneven playing field. Any preferential treatment for one category over others would distort the market and harm competition."
The comments come amid reports that the Karnataka government is considering a revision of its excise policy, which could include changes in taxation, licensing, and the introduction of new compliance mechanisms.
Support for Alcohol-in-Beverage Mechanism
CIABC, however, welcomed the proposed introduction of the Alcohol-in-Beverage (AIB) mechanism, describing it as a progressive step. The AIB system is designed to calculate excise duty based on the actual alcohol content in beverages, rather than on the volume of the drink.
"The AIB mechanism is a forward-looking reform that aligns taxation with alcohol content, promoting transparency and fairness. It reflects the government's intent to reform the sector in a scientific and equitable manner," Giri added.
Impact on Beer and Other Categories
The industry body noted that the AIB system could particularly benefit lower-alcohol beverages like beer and wine, which currently face disproportionately high tax burdens compared to spirits. However, it cautioned against any move that would exclusively benefit one category.
"We urge the government to ensure that the transition to AIB is gradual and does not disrupt existing business models. Moreover, any tax reduction should be applied uniformly across all categories to avoid market distortions," the statement said.
Background
The Karnataka excise policy has been under review for several months, with stakeholders from various segments submitting recommendations. The state government is expected to announce the new policy in the coming weeks, ahead of the new financial year.
CIABC represents major alcoholic beverage companies in India and has been actively engaging with state governments on excise reforms. The organization has previously advocated for a uniform national excise policy to simplify compliance and reduce litigation.
Industry Expectations
The industry expects the new policy to address long-standing issues such as high tax rates, complex licensing procedures, and frequent policy changes. CIABC has also called for greater consultation with industry stakeholders before finalizing the policy.
"We hope the Karnataka government will adopt a consultative approach and consider the feedback from all segments of the industry. A balanced policy will not only boost revenue but also encourage investment and innovation in the sector," Giri concluded.
The development comes as Karnataka, one of India's largest markets for alcoholic beverages, seeks to streamline its excise regime while maximizing revenue collection.
