Bengaluru: Karnataka’s excise revenue rose 12.54% year-on-year to ₹11,595.88 crore during the July-September quarter of 2026-27, with a sharp increase in beer sales emerging as one of the key drivers of higher collections.
According to data from the Karnataka Excise Department, the state collected ₹1,291.94 crore more in the second quarter compared with ₹10,303.94 crore collected during the corresponding period of 2025-26. Beer sales recorded particularly strong growth, while Indian Made Liquor (IML) continued to account for the largest share of excise revenue.
Beer sales jump nearly 50%
Beer volumes in Karnataka rose sharply during the quarter, increasing 49.69% year-on-year.
The state sold 126.68 lakh case boxes of beer between July and September 2026, compared with 84.63 lakh case boxes during the same period last year. This represents an increase of 42.05 lakh case boxes.
The growth is notable because beer sales recorded substantially faster volume growth than IML during the quarter.
Beer-related excise revenue also increased, although at a slower pace than the growth in volumes. Collections from beer rose 18.52% to ₹1,463.07 crore, compared with ₹1,234.50 crore in the year-ago quarter.
The increase translated into an additional ₹228.57 crore in revenue for the state government.
IML remains the biggest revenue contributor
Despite the sharp increase in beer consumption, Indian Made Liquor (IML) remained the largest contributor to Karnataka’s excise collections.
IML sales increased 1.52% during the July-September quarter, reaching 171.69 lakh case boxes, compared with 169.12 lakh case boxes in the corresponding period last year.
Revenue from IML rose more significantly, increasing 13.36% to ₹9,033.21 crore from ₹7,968.69 crore a year earlier.
The increase of ₹1,064.52 crore from IML accounted for a substantial portion of the overall rise in Karnataka’s excise collections during the quarter.
Other excise collections remain stable
Revenue from other excise-related sources, including licence fees and fines, remained broadly stable during the quarter.
Collections under these categories stood at ₹1,099.60 crore in July-September 2026, marginally lower than ₹1,100.75 crore recorded during the same quarter of the previous year.
The figures indicate that the overall increase in excise revenue was primarily driven by higher collections from IML and beer rather than a significant increase in revenue from licences and fines.
Karnataka’s new AIB policy
The increase in beer sales comes after Karnataka introduced an Alcohol-in-Beverage (AIB)-based excise duty structure in May 2026.
The state government had said the new system was aimed at rationalising liquor pricing and bringing prices closer to those in neighbouring states. The policy also moved away from government-administered price fixation, allowing producers greater flexibility in placing products within prescribed slabs.
The AIB-based system was implemented from May 11, 2026, following the state’s 2026-27 Budget announcement. The Excise Department described the structure as a new approach to alcohol taxation in India.
The timing of the policy change and the subsequent increase in beer sales have drawn attention to the changing consumption pattern in Karnataka’s alcoholic beverage market.
First-half excise revenue also rises
The strong second-quarter performance has contributed to a significant increase in Karnataka’s excise collections during the first half of the financial year.
Separate data reported by The New Indian Express showed that Karnataka collected ₹22,191.63 crore in excise revenue between April and September 2026, compared with ₹19,570.23 crore during the same period last year.
That represents a 13.39% increase in first-half collections. Beer revenue during the six-month period reached ₹3,377.88 crore, compared with ₹2,836.64 crore a year earlier, marking an increase of ₹541.24 crore.
The first-half figures suggest that the state’s excise collections are progressing towards the annual target set for 2026-27.
State targets ₹45,000 crore excise revenue
Karnataka has set an excise revenue target of ₹45,000 crore for 2026-27.
With collections reaching ₹22,191.63 crore in the first six months, the state has crossed the halfway mark of its annual target.
The upcoming festive season could further influence liquor sales and excise collections in the second half of the financial year. However, revenue growth will also depend on consumption patterns, pricing and the performance of different liquor categories.
Beer gains pace while IML grows slowly
The quarterly data point to a clear difference between beer and IML consumption in Karnataka.
Beer volumes increased by nearly 50% in the second quarter, whereas IML volumes grew by just 1.52%. At the same time, IML continued to generate far more revenue for the state because of its much larger overall sales base.
The trend suggests that beer is becoming an increasingly important component of Karnataka’s excise revenue mix, even though IML remains dominant in terms of government collections.
For the state government, the rise in excise revenue provides a significant boost to its finances. With ₹11,595.88 crore collected during the July-September quarter and more than ₹22,000 crore collected during the first half, Karnataka’s excise department is currently on course to make substantial progress towards its ₹45,000-crore annual target.