Karnataka overhauls alcohol pricing with new AIB-based duty system

Karnataka has overhauled its alcohol pricing, becoming India's first state to implement an Alcohol-in-Beverage (AIB) based excise duty structure. This deregulates price fixation, letting producers set prices for liquor and beer within slabs.

In a complete overhaul of how alcohol is priced in the state, the Karnataka State Excise Department has directed the publication of revised Maximum Retail Prices (MRP) for liquor and beer brands. The changes come under the newly implemented Alcohol-in-Beverage (AIB) based excise duty structure, making Karnataka the first state in India to adopt such a system.

New Rules and Timeline

The shift to the AIB-based structure was initially announced by the Chief Minister during the 2026-27 Budget speech. Following up on that commitment, the government issued Notification No. FD 14 PES 2026 on May 8, 2026, amending the Karnataka Excise (Excise Duties and Fees) Rules, 1968. The new rules officially came into effect on May 11, 2026.

How the AIB Structure Works

Under the new rules, the government has rationalised liquor and beer product prices across the board. The revised MRPs apply to all products manufactured after May 11, 2026. Crucially, the AIB structure deregulates government-administered price fixation. Instead of the state rigidly setting prices, producers now have the flexibility to place their products within specific pricing slabs based on market considerations and alcohol content.

Public Awareness Campaign

In a letter dated May 16, 2026, addressed to the Commissioner of the Department of Information and Public Relations, the Excise Commissioner's office stressed the importance of public awareness regarding the new pricing. The department has requested the immediate publication of the revised MRP list for popular liquor and beer brands, detailing both prices and sizes, in leading state-level Kannada and English newspapers. The new AIB structure marks a historic shift toward deregulation in the Indian liquor industry, balancing market-driven pricing for producers with structured slabs intended to rationalise costs for the consumer. (ANI)

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