The Brewers Association of India (BAI) has welcomed the Karnataka government’s draft notification introducing an Alcohol-in-Beverage (AIB)-based taxation structure for the alco-beverage sector, calling it a landmark reform for both revenue optimisation and public health.
The draft notification, issued on April 18, proposes amendments to the Karnataka Excise (Excise Duties and Fees) Rules, 1968. The reform implements a taxation model based on the actual alcohol content in beverages rather than total liquid volume. The move follows announcements made by Chief Minister Siddaramaiah in the State Budget 2026–27.
According to BAI Director General Vinod Giri, the AIB-based system represents a “watershed moment” in India’s excise policy framework. “Karnataka has become the first state to explicitly link revenue goals with public health outcomes. This is a progressive step that aligns taxation with alcohol content, encouraging moderation,” he said.
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BAI noted that AIB-based taxation is considered a global best practice and is recommended by the World Health Organization. It is widely adopted across major economies as a way to balance fiscal and health objectives.
In addition to the new taxation structure, the draft rules introduce broader reforms aimed at improving ease of doing business. These include deregulation of price controls, simplified tax frameworks, auto-renewal of manufacturing licences, online approvals, and provisions for 24-hour operations for breweries and distilleries. The policy also aims to boost tourism linked to breweries.
While supporting the reform, BAI indicated it would submit further suggestions regarding tax slabs for beer. The association expressed hope that other states would adopt similar progressive policies.
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