The hospitality industry in Karnataka faces turbulence as the state government’s recent hike in liquor licence and excise fees draws sharp criticism. Despite reducing the proposed 100% fee hike to 50% following industry backlash, local distillers argue that the increase remains burdensome and could push businesses out of the state.
Neighbouring Andhra Pradesh has seized the opportunity to attract disgruntled distillers with favorable policies. The state is actively courting Karnataka’s liquor manufacturers, offering competitive terms to relocate operations.
Karnataka, where liquor taxes contribute nearly 20% of state revenue, announced the revised rates will take effect from July 1. Industry stakeholders, however, maintain that even the adjusted fees are excessive.
Huli, India’s pioneering jaggery-based rum brand based in Mysuru, has openly voiced concerns. Co-founder Aruna Urs took to social media, stating the hike is a deterrent to local businesses: “The state government is literally forcing #Huli to move out of Mysuru to Goa or Maharashtra. The annual distillery licence fee has been increased by 50%! Is this @INCIndia’s idea of ease of doing business?”
From a hospitality perspective, such policy decisions risk undermining Karnataka’s burgeoning reputation as a hub for craft spirits and local distilleries. The financial strain on small and medium-scale manufacturers may stifle innovation and disrupt supply chains that are vital for the state’s hospitality sector.
As Andhra Pradesh rolls out the red carpet, Karnataka risks losing key players in its liquor industry—a development that could reshape the regional dynamics of the sector.
