What Are the Impacts of the Maha Cabinet's Approval for Grain-Based Alcohol and IMFL Excise Duty Hike?
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Synopsis
On June 10, the Maharashtra Cabinet authorized the creation of a new category of liquor and raised excise duties on IMFL, potentially increasing prices by 50%. This move aims to boost state revenue while supporting local farmers. Explore the implications of these changes on the state's alcohol market.
Key Takeaways
- Maharashtra Cabinet approves MML and excise hike.
- IMFL prices may increase by 50%.
- Expected annual tax revenue increase of Rs 14,000 crore.
- MML aims to fill market gaps and support local farmers.
- Last excise increase was in 2011, marking a significant policy change.
Mumbai, June 10 (NationPress) The Maharashtra Cabinet, led by Chief Minister Devendra Fadnavis, approved the establishment of a new category of Maharashtra Made Liquor (MML) while also endorsing an increase in the excise duty on Indian Made Foreign Liquor (IMFL).
This decision is anticipated to boost the annual excise tax revenue by Rs 14,000 crore.
As a result of the excise hike, the prices of IMFL and premium foreign brands in the state may rise by approximately 50 percent.
Industry experts, however, have expressed skepticism regarding the tax increase.
The state government has also approved allowing the operation of FL 2 (vendor license for foreign liquor) and FL 3 (license for selling imported and IMFL liquor where excise duty has been paid) establishments on a lease basis with an additional 15 percent and 10 percent to the annual license fee, respectively.
The excise duty on IMFL will increase from three times the manufacturing cost to 4.5 times, raising alcohol prices in the state by nearly 50 percent.
This applies to IMFL with a manufacturing cost of Rs 260 per bulk litre.
The excise on country liquor has been raised from Rs 180 per proof litre to Rs 205.
The term 'proof litre' measures the alcohol content in beverages, thus increasing the minimum existing MRP for a 180 ml bottle.
For country liquor, the excise will rise to Rs 80 (currently around Rs 60-70); for IMFL, it will be Rs 205 (currently Rs 115-130); and for premium foreign brands, it will be Rs 360 (currently Rs 210).
An official stated that the last excise increase by the state government was in 2011, making this change the first in 14 years.
The introduction of MML will create a new category within the current alcohol frameworks, which will be less expensive than IMFL but pricier than country liquor.
Maharashtra possesses a total of 70 licenses for alcohol manufacturers, of which 38 are inactive due to competition from foreign entities dominating 80 percent of the market. The MML category is designed to address this gap, according to a senior official from the State Excise Department.
The MML classification will include grain-based alcohol, requiring brands to be registered in Maharashtra. Existing external brands cannot enter this category. The MML will adopt the tax structure of country liquor but will only be available through FL II and FL III licenses.
States such as Uttar Pradesh and Rajasthan have already established similar categories.
According to estimates, the current segment comprises about 5 to 6 crore litres, which could expand to 10 to 11 crore litres. The expected revenue from this is projected to be Rs 3,000 crore.
Moreover, as a grain-based alcohol, the MML category will also provide better prices for farmers while boosting state revenue.
Point of View
This significant policy change by the Maharashtra government reflects a strategic effort to enhance local production while increasing tax revenues. However, it is crucial to assess the potential impact on consumers and the existing market dynamics. The balance between supporting local farmers and ensuring affordability for consumers must be carefully navigated.
NationPress
27/07/2025
Frequently Asked Questions
What is the new category of liquor approved by the Maharashtra Cabinet?
The new category is called Maharashtra Made Liquor (MML), which aims to offer a cheaper alternative to Indian Made Foreign Liquor while supporting local farmers.
How much will prices of IMFL increase due to the excise hike?
Prices of IMFL and foreign premium brands are expected to rise by approximately 50% due to the hike in excise duty.
What is the expected revenue from the new MML category?
The anticipated revenue from the MML category is projected to be around Rs 3,000 crore, with an estimated market growth from 5 to 11 crore litres.
When was the last excise duty increase in Maharashtra?
The last increase in excise duty occurred in 2011, making this the first hike in 14 years.
How will the MML category impact farmers?
The MML category, being grain-based, is expected to provide better prices for farmers and improve their economic conditions.
