In a significant move for the state's liquor trade, Karnataka is set to auction a total of 38 defunct liquor licences from the coastal districts of Dakshina Kannada and Udupi through a transparent online process. This initiative, part of a broader state-wide effort, marks a pivotal shift in how such permits are allocated after decades.
Historic E-Auction to Boost State Revenue
The upcoming auction is a direct outcome of a proposal made in the 2025-26 state budget. The government aims to allocate unused liquor licences via a transparent electronic auction to aid in additional resource mobilisation. Officials confirmed that the process has now commenced, with the online auctions scheduled to begin from mid-January.
This event holds particular importance as the state has not issued new CL-2 and CL-9 category licences since 1992. Of the 38 licences on the block in the coastal region, 30 are located in Dakshina Kannada district, while the remaining eight are in Udupi. Across Karnataka, a substantial 579 liquor licences will be made available through this online auction process.
Why Licences Became Defunct and Current Market
Explaining the reason behind these licences lying dormant, Bindushree P, the Deputy Commissioner of the Excise Department in Dakshina Kannada, cited several factors. "These licences became defunct due to legal issues, the death of owners with no successors, or a lack of interest among heirs in continuing the business. They are now being offered through e-auction," she stated.
She further clarified the current licensing landscape. Dakshina Kannada currently has about 584 liquor shops operating on various licences, including CL-2 and CL-9. However, the categories currently being issued by the department are CL-7 and CL-11C. In Udupi district, there are a total of 455 active liquor licences.
High Stakes and Investor Apprehensions
While the auction presents a rare opportunity, officials acknowledge that investor response remains uncertain due to the significant capital required. The licences will be granted for a period of five excise years. In urban areas, the base bidding price starts at a steep Rs 1 crore. Setting up the business thereafter is estimated to require an additional investment of around Rs 2 crore.
To ensure a smooth bidding process in this novel initiative, TM Srinivas, Deputy Commissioner of Excise in Udupi, announced preparatory measures. "As e-auction for liquor licences is being introduced for the first time, a training workshop will be conducted for bidders ahead of the main auction," he said.
This landmark e-auction represents Karnataka's push towards digitisation and transparency in a high-revenue sector, potentially setting a precedent for future allocations while aiming to tap into previously frozen assets for state development.
