Indian Alcoholic Beverage Industry seeks price revision amid soaring production costs

Hyderabad, May 3, 2025: The Confederation of Indian Alcoholic Beverage Companies (CIABC) has urged the Telangana state government to permit a supply price revision for alcoholic beverages, citing severe inflationary pressures and the absence of a regular annual price review mechanism.

According to CIABC Director General Anant S Iyer, there has been a sharp increase in production costs across the operational and manufacturing chain. Since the last price revision in May 2023, the industry has witnessed a substantial rise in input costs, including Extra Neutral Alcohol (ENA), malt spirit, packaging materials, labour, transportation, and other services. The industry association has submitted a Proposal to the Telangana government for WPI-Linked Price Escalation to allow for systematic, inflation-based adjustments.

“Currently, the Revenue Share Disparity has hit severely the bottom line of the companies with the government taking interim tax increases inhibiting a stable organic growth. Currently, the government retains over 70% of the Maximum Retail Price (MRP) of alcoholic beverages. In contrast, manufacturers receive only 12-15%, and retailers about 15-18%. While the government income goes up, supplier companies have to absorb the cost escalation in absence of an annual review mechanism,” Mr Iyer said.

Speaking further on Tax Burden and impact of industry being under GST exclusion, he said “The alcoholic beverage sector remains outside the scope of GST, preventing companies from claiming Input Tax Credit (ITC) on GST paid for raw materials. This exclusion results in an additional 3-5% increase in production costs”.

“The entire IMFL industry seeks a kind consideration of Price revision request of ₹100–₹200 per case for Indian Made Foreign Liquor (IMFL) and 5% hike for wine products”. This would translate to a modest increase of just ₹2.50 to ₹5/- per 180 ml bottle. While the beer industry has already received approval for a price hike, spirit and wine manufacturers are yet to receive similar relief, despite facing identical cost pressures” he said.

The CIABC has also raised the issue of the total overdue amount exceeding 45 days which today stands at around Rs.2800 crore, while the cumulative interest burden on this outstanding amount is around Rs.400 crore.

Iyer said the financial viability of the industry is at risk. Any further taxation without supply price adjustments could jeopardize operations. He reiterated the industry's commitment to working with the government and meeting the consumer expectations, but urged immediate intervention to ensure sustainability.

About CIABC: It is the apex body of the Indian Alcoholic Beverage Industry. Its members include major Indian companies who manufacture and market their product range in India and abroad. It represents wide and inclusive interests of the Indian industry.