Maharashtra is one of India’s biggest markets for premium alcohol—about 7% of the country’s consumption—and both Diageo and Pernod Ricard have major factories there. Mumbai, the state’s capital, is an especially important market for targeting wealthier consumers.
What the new policy does
Between June and August, the Maharashtra government launched a new scheme to encourage local investment. It introduced a special category called “Maharashtra Made Liquor” (MML). To qualify, companies must be headquartered in the state and have no foreign investment. MML products are taxed at 270%.
All other premium “affordable” liquor brands—with production costs under ₹260 per litre—had their taxes raised from 300% to 450%. This affected several well-known brands, including:
Diageo’s McDowell’s (India’s biggest-selling whisky)
Pernod Ricard’s Royal Stag
Tilaknagar’s Imperial Blue
Allied Blenders & Distillers’ Officer’s Choice
Why the industry is upset
The International Spirits and Wines Association of India (ISWAI), representing Diageo and Pernod Ricard, argues the policy unfairly favors local companies and creates trade barriers. In its court filing on November 14, the group asked the judges either to scrap the policy or to allow companies with foreign investment to qualify for the lower tax rate.
The case will be heard in the Bombay High Court on December 9.
ISWAI’s petition says the government is giving “an artificial competitive advantage” to preferred companies.
The Maharashtra government hasn’t commented on the lawsuit but has said publicly that the policy will create jobs, attract investment, increase factory output, and generate about $1.56 billion in extra annual revenue.
Impact on sales
According to the Confederation of Indian Alcoholic Beverage Companies, the affected affordable segment makes up 70% of Maharashtra’s premium spirits market. Since the tax hike, sales of affected brands have dropped 35–40%.
The bigger picture
India is the world’s eighth-largest alcohol market, worth about $45 billion a year. Each state sets its own rules, and global liquor companies are already facing multiple challenges, including:
A demand for $337 million in overdue payments from Telangana’s state-run depot
Tighter advertising restrictions
Several antitrust investigations
