Bengaluru, May 2 (PTI) Brewers' Association of India (BAI) on Friday expressed their "grave concern" over the recent increase in additional excise duty (AED) on beer by 10 per cent. In effect, with three hikes in the last two years, the AED has been increased by "205 per cent" in Karnataka, it claimed.

In a letter addressed to Chief Minister Siddaramaiah, BAI urged him to immediately withdraw the latest tax increase and put a stop to frequent hikes in taxes, which, they claimed, badly hurt the industry and investment climate in Karnataka.

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"This is the fourth tax increase on beer in less than two years, which is almost unheard of anywhere. In July 2023, the AED on beer was increased from 175 per cent to 185 per cent. In February 2024, it was increased to 195 per cent. Then Excise Duty was increased by Rs 10 per bulk litre in January 2025 on the vast majority of beer sold in the state, and now the AED is again being increased to 205 per cent," BAI Director-General Vinod Giri said in his letter to Siddaramaiah.

Giri said this has resulted in the prices of beer to go up from Rs 160 per bottle to about Rs 200 per bottle.

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Strongly objecting to the steep AED hike, the BAI Director-General said: "In 2022-23, the beer industry's growth was 46 per cent, which has fallen down drastically to just 1 per cent in 2024-25. It is alarming. It is also evident that this latest tax increase will further push beer sales down."

He also pointed out that beer contributes disproportionately high to the government tax revenues in the state. It accounts for eight per cent of the volume of alcoholic beverages, but 16 per cent of the tax revenues are earned from the sector. "This share has been rising -- it was 11 per cent five years ago and is now 16 per cent," he added.

Giri further noted that BAI members, which account for the majority of beer sold in Karnataka, have invested nearly Rs 3,500 crore in Karnataka, which has more breweries than any other state. Karnataka has 11 breweries, providing employment to nearly 7,000 people, he added.

"But with falling sales volumes, we are concerned that the breweries in the state may not remain commercially viable," Giri said.

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