Bengaluru, Nov 6, 2025:
The Karnataka government has officially amended its excise rules to allow electronic auctions (e-auctions) of unused or defunct liquor licences across the state. The move is expected to bring in around ₹600 crore in additional revenue for the state exchequer.
The notification, issued on November 3, includes changes to three sets of excise rules —
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Karnataka Excise (General Conditions of Licences) Rules, 1967,
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Karnataka Excise (Lease of Right of Retail Vend of Beer) Rules, 1976, and
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Karnataka Excise (Sale of Indian & Foreign Liquors) Rules, 1968.
These amendments have been made under Section 71 of the Karnataka Excise Act, 1965 and will now be known as the Second Amendment Rules, 2025.
New Licence Categories Introduced
To handle unused licences, the state has created two new categories:
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CL-2A — for retail liquor shops (earlier CL-2), and
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CL-9A — for bars and restaurants (earlier CL-9).
E-Auction Through Government Platform
The government has engaged MSTC Limited, a Government of India enterprise, to conduct these auctions through a transparent online e-auction system. About 579 unused licences—mostly belonging to government-run MSIL (Mysore Sales International Limited) outlets—will go under the hammer.
Rules for Lapsed Licences
As per the amended notification, any licence that is not renewed within six months of the start of the excise year or within six months of the licensee’s death will be treated as lapsed and forfeited. Such licences will automatically be added to the auction pool and cannot be renewed or reclaimed by the previous licensee.
Additionally, the amendment to Rule 17-A allows for conditional transfer of licences to legal heirs in the event of a licensee’s death, provided it happens during the licence’s validity or within six months thereafter.
Industry Reaction
However, the Federation of Wine Merchants’ Associations of Karnataka has raised concerns, claiming that the number of licences identified for auction is much lower than the government’s estimate. The association says many of these licences were originally allotted to MSIL in 2009 and, therefore, may not be eligible for auction.
