Bengaluru: In a break from a decades-old system, Karnataka will stop fixing retail prices of alcoholic beverages from April 2026, allowing beer and liquor makers greater freedom to set prices in one of India’s largest alcohol markets.
Announcing the move in the 2026-27 state budget on Friday, chief minister Siddaramaiah said the government will also introduce an alcohol-in-beverage (AIB) based excise duty structure, linking taxes directly to the alcohol content in drinks.
“Excise duty will be linked to the alcohol content in beverages by introducing an alcohol-in-beverage based taxation system,” Siddaramaiah said in his budget speech.
Under the proposed system, the government will deregulate price fixation, allowing manufacturers to determine product pricing instead of seeking state approval.
The number of pricing slabs will also be reduced to eight from the current 16, he said.
“Government-administered price fixation will be deregulated and the number of price slabs will be rationalised,” the chief minister added.
The shift marks one of the most significant changes to Karnataka’s liquor policy in years. The state currently operates a controlled pricing regime in which manufacturers declare ex-factory prices and the government fixes the final retail price.
Siddaramaiah said the new excise framework will be implemented in phases over the next three to four years to ensure gradual adjustments in the market. Liquor taxation remains a major revenue source for the state. The government has set an excise revenue target of Rs 45,000 crore for 2026-27 in the budget.
The excise department also plans to introduce technology-driven monitoring systems, including blockchain-based digital tracking and geo-fenced e-locks for transporting liquor consignments, to curb leakages.
In addition, the government will allow distilleries and breweries to conduct tasting sessions and sell products at their premises for visiting tourists, as part of efforts to promote alcohol tourism in the state.
