Telangana suspends liquor price hike to prevent revenue loss to neighboring states

The Telangana Excise Department has put a proposed hike in liquor procurement prices on hold due to concerns that increased retail rates would drive consumers to purchase cheaper alcohol in neighboring Karnataka and Andhra Pradesh. The decision to halt the annual price revision follows consultations held by a review committee a month ago.

Officials fear that raising prices further would widen the pricing gap with neighboring states, particularly affecting sales in border districts. This could encourage cross-border purchases and dent Telangana's state sales and excise revenues.

The three-member review committee, tasked with the annual price revision, completed consultations with liquor manufacturers last month. However, the panel has not met since, leaving the exercise in limbo as officials reassess the changing pricing structures in neighboring states.

The rethink was prompted by recent policy shifts in Karnataka, which implemented a uniform excise duty structure in May. This replaced an older system that levied higher rates on premium brands, resulting in a sharp drop in retail prices for premium liquor in Karnataka and a subsequent rise in sales. Meanwhile, Andhra Pradesh has kept its liquor prices unchanged, leaving several brands cheaper than they are in Telangana.

Telangana currently levies some of the highest excise duties in the country, ranging from Rs 550 to Rs 2,000 per case depending on the category. During the consultations, manufacturers requested a 15 percent increase in procurement prices to offset the rising costs of raw materials, packaging, and transportation. Any hike in procurement prices would directly translate to higher retail prices for consumers.

The ongoing delay has caused uncertainty for industry representatives, who report that the lack of a decision is impacting their business planning and inventory management. Manufacturers continue to press for a resolution to conclude the annual pricing exercise.