ANASUYA RAY WAS understandably confused during her induction at AB InBev India, the brewers of Budweiser beer. Coming from the FMCG sector, the ‘alcobev’ space was entirely new to her. However, the source of her confusion wasn’t the brewing process, but a supply chain colleague who kept briefing her on “exporting from here and importing there”.
“I was wondering, ‘What is he talking about?’ We are just sending goods from Bengaluru to Hyderabad. Where is the export and import happening?” Ray recounted. She eventually learned that alcohol consignments require “export and import passes” just to cross state borders.
“To top it all off, when goods are transferred from one ‘country’ to another, there is actually an excise official sitting inside that truck to ensure the inter-border transfer happens,” she said. “In this day and age, when we track food through Zomato, we are still dependent on a person rather than GPS tagging? Things need to change!”
Rules do change in India, but rarely in the way manufacturers hope. Every year, on April 1, state excise policies are overhauled. “What happens then? Every label you see on our bottles has to change,” said Ray. “Everything must go for renewal. And every renewal means vast amounts of money, energy and resources being poured into it.”
Navigating the laws governing India’s alcohol sector is like entering a maze filled with paperwork in triplicate and random inspections. Because alcohol is a ‘state subject’ under the 7th Schedule of the Constitution, each state is free to legislate as it pleases. This has resulted in a patchwork of regulations that can be diametrically opposite once you cross a state line.
“Every year, what the state government does determines our future,” said Anant S. Iyer, director-general of the Confederation of Indian Alcoholic Beverage Companies (CIABC). “One day the sun can be shining, and suddenly it sets without warning. It depends entirely on the whims and fancies of whoever wants to change policy.”
This legislative freedom has led to total prohibition in states like Gujarat and Bihar. Even in ‘wet’ states, the complexity is staggering. Tax structures vary so wildly that the price of the same bottle can double from one state to the next.
Historical quirks also persist. Until the 2000s, a provision in the Punjab Excise Act (which then governed Delhi) prohibited bars from displaying bottles, fearing they would provide “unwise temptation” to patrons who were, ironically, already inside the bar.
These restrictions aren’t merely a post-1947 phenomenon. The British introduced several restrictive laws, such as the Bombay Abkari Act of 1878, to suppress India’s indigenous alcohol cultures—like toddy, arrack, and mahua—in favour of revenue-generating foreign-made liquor. Post-independence, Gandhian sentiments led to Article 47 of the Constitution, which recommends that the state “endeavour” to bring about prohibition, even as the power to tax remained firmly with the states.
Today, alcohol is the ‘golden goose’ of state revenue; many state economies would crumble without it. Yet, this dependency creates an intricate trap for distillers, bar owners and tourists alike.
The legal drinking age is a prime example of the lack of uniformity. It ranges from 18 in Goa and Sikkim to 25 in Delhi. Maharashtra employs a curious ‘permit system’—a legacy of the 1949 Bombay Prohibition Act—where a drinker technically needs a permit to consume alcohol. The state also sets the age limit for beer and wine at 21, but raises it to 25 for spirits.
Distribution is equally varied. In Tamil Nadu, the state body TASMAC is the sole distributor. ‘Dry days’ fluctuate wildly. In Kerala, the first of every month is dry, though this has recently been relaxed for star hotels to serve liquor during pre-approved events. Meanwhile, states like West Bengal and Odisha have embraced modernity by allowing alcohol delivery via apps.
Further complications often come from the courts. In the mid-2010s, a Supreme Court order banned liquor sales on national highways to curb drink-driving. However, because national highways double as the main thoroughfares in most Indian towns, the ban threatened to shut down a massive portion of the industry. In response, several states reclassified their national highways as ‘state roads’ to circumvent the ruling.
Price discrepancies also fuel ‘booze tourism’ and smuggling. Because Goa and Puducherry have much lower taxes than neighbouring Maharashtra or Tamil Nadu, excise officers constantly patrol state borders. In dry Gujarat, it is a common weekend sight to see tourists flocking across the border to Mount Abu in Rajasthan, primarily to partake in the potions forbidden at home.
When India moved to a unified Goods and Services Tax (GST) in 2017, two sectors were excluded at the states’ instance: fuel and liquor. This remains a point of contention for manufacturers.
“Alcohol is not under GST, but please remember all our inputs are,” Ray explained. “The beer industry uses barley and malt, and all these things are charged GST.” This creates a ‘broken’ tax chain where manufacturers pay GST on raw materials but cannot claim credits against the excise duty paid on the final product.
While uniform alcohol laws may be a distant dream given the current political climate, the industry continues to push for modernisation. “Tweak these laws and look ahead,” said Ray. “Get some benchmarks from across the world and implement them. India’s time is here and now, and every change is a step forward in the journey.”