Liquor Stocks Rise Amid Market Turmoil: United Spirits and Radico Khaitan Lead Gains

India's Liquor Stocks Surge on Karnataka's Excise Reforms

On March 6, liquor stocks in India experienced a significant surge, with United Breweries, United Spirits, Tilaknagar Industries, and Radico Khaitan gaining between 4% and 7% at their intraday highs. This increase in stock value can be attributed to the Karnataka government's announcement of a shift to a global taxation standard and the complete deregulation of alcohol pricing while presenting the state budget.

Karnataka, one of India's largest states, is a significant market for alcoholic beverages, driven by a large base of young professionals and a multinational workforce that demands premium brands. The state government plans to modernize its decades-old excise framework and introduce reforms aimed at improving transparency, compliance, and ease of doing business.

Key Reforms

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• The Karnataka government will introduce an Alcohol-in-Beverage (AIB)-based excise duty structure, which taxes alcohol based on its strength and reduces pricing categories to eight from 16.
• The new system will allow producers to decide prices, replacing the current duty structure and rationalizing pricing across alcoholic beverages.
• The AIB-based excise duty structure is globally recognized as the gold standard for alcohol taxation, as it directly targets the alcohol content, which is the primary source of negative externalities.

Implementation Timeline

• The new system will be introduced from April 2026.
• The state has reported a 12.7% growth in excise revenue for the current fiscal year, reaching ₹36,492 crore by February.

Revenue Targets

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• The state has set an ambitious revenue target of ₹45,000 crore for the 2026-27 financial year.
• Other revenue collection targets for the financial year 2026-27 include:
  • ₹29,000 crore from stamps and registration
  • ₹15,500 crore from motor vehicles
  • ₹11,000 crore from royalty on mines