AIB TAXATION HELPS STATE ACHIEVE TWIN GOALS OF INCREASING TAX REVENUES AND REDUCING HARMFUL USE OF ALCOHOL, SAY BAI DG VINOD GIRI
SEVERAL STATES CLOSELY FOLLOWING AIB TAX REFORMS; STRONG RESULTS WILL ENCOURAGE WIDER ADOPTION: VINOD GIRI
BANGALORE/DELHI, 06 Oct, 2026: The Brewers Association of India (BAI), the apex body of the beer industry, has welcomed the success of the Alcohol-in-Beverage (AIB) taxation regime in its first five months of its implementation in Karnataka.
As per the data released by government, the total tax collection during the period April – September 2026 has jumped by +13.4% to Rs 22,191 crores. This is particularly heartening for the State Government as the revenue growth rate during the same period last year stood at only +2.8% over the year before.
During April – September 2026 period, beer sales have grown at the rate of +41.3%, a remarkable jump from previous year’s growth rate of -19% during same period. This indicates a consumer shift towards milder forms of alcohol, a welcome step towards reducing harmful use of alcohol. The tax collections from beer have also risen by +19%.
Congratulating the Karnataka Government for implementing the progressive AIB taxation framework so successfully, Vinod Giri, Director General, BAI said: “Alcohol content- based tax is the gold standard of alcohol taxation. It is followed widely all over the world and recommended by the World Health Organization (WHO) as a tool to reduce harmful use of alcohol. However, the rate of taxation needs to hit the sweet-spot to optimize the economic goal of maximizing revenues and public health goals of encouraging milder alcoholic beverages, and the Karnataka Government seems to have done that very well.”
The data also allays concerns that AIB taxation will have major adverse impact on the IMFL industry. During April – September 2026, IMFL sales have held ground at +1.1% whereas the tax revenue from IMFL has jumped by +13%. This seems to validate the premise that IMFL, especially in the economy segments, was earlier under-taxed in Karnataka. It also indicates that people may be shifting over to more premium liquor products.
“Increase in beer and wine sales, and up-trading in IMFL to better quality products shows people are drinking milder and better forms of alcohol which is a much-desired public policy outcome of reducing harmful effects of alcohol. The is what an AIB taxation framework is meant to deliver,” said Mr Giri.
The Karnataka Government introduced AIB taxation framework in the State w.e.f. 11th May 2026. This framework imposes Excise duty on basis of the actual amount of alcohol in the product. It is based on the premise that the product to be taxed is alcohol and not water in the beverage. In addition to the Excise duty, Karnataka also applies an Additional Excise Duty (AED) based on the value of the product which also has been rationalized in to less number of price slabs and a progressive rate of taxation.
“By switching over to AIB-based taxation mechanism, Karnataka has become the first state in the country to explicitly optimize the economic goal of revenue maximization with desired public health outcome goals of encouraging moderation in alcohol consumption. It is a proven successful model the World over. Several other states are keenly watching its implementation in Karnataka and we hope that these results will encourage more States to follow suit.”, said Mr Giri.
The BAI DG further said the reforms in the new Excise rules in Karnataka go beyond to also bring about step changes in Ease of Doing Business for the alcobev sector such as full deregulation of government-administered price fixation, simplification of taxation framework, auto-renewal of manufacturing licenses, online approvals, 24-hour operations for distilleries and breweries, and creating tourism opportunities around breweries. Such progressive steps will promote state’s economy and the industry and make Karnataka more attractive investment destination.
For more details please contact — Mr Vinod Giri, DG, BAI (Ph. 98115 29085)
Note to the Editor:
Brewers Association of India (BAI) is the apex body of the beer industry which represents India’s largest beer makers such as the AB InBev, Carlsberg, and United Breweries (a Heineken company). Its member companies together account for 85% of the beer sold in India. They are also big investors in India operating over 55 breweries worth Rs 25,000 crores of investment, employing over 27,000 people, and create a massive economic impact.
Facts About Beer
Globally, beer is the pre-eminent form of alcohol. It accounts for 68% of alcoholic beverage sales, $1 out of every $120 of the global GDP, $375 billion of taxes, and 33.5 million or 1% of all jobs.
In India, Beer contributes Rs 92,000 crores to the GDP, contributes Rs 51,000 crores in various taxes and supports 123 lakh jobs.
Beer is all locally made, supports local industries from agriculture to hospitality. It requires large investment and create 2.3 times economic value and 32 times employment in downstream industries to local communities.
Substituting high alcohol beverages with low alcohol beverages like beer, reduces harm and per capita consumption of alcohol without loss of overall Govt revenues.
Beer is difficult produce or sell illicitly. Nudging consumers towards beer incentivizes drinking regulated products, mitigates health risks associated with illicit alcohol, and prevent leakage of Government revenues.
For thousands of years, beer has been at the heart of social rituals which builds local communities, bring people together and strengthen social connections in a light-hearted and warm manner.
