Karnataka slashes proposed liquor licence fee hike by 50%, eases inspection norms

In a major reprieve for Karnataka’s liquor industry, the state government has scaled down the proposed 100% hike in licence fees for distilleries and wine stores by half and significantly relaxed regulatory inspections. Starting July 1, excise inspections will now be held once every five years instead of annually.

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The decision comes after sustained lobbying by industry stakeholders who met with Chief Minister Siddaramaiah and finance department officials earlier this month. The rollback means the CL-9 licence fee for bars and restaurants will now be ₹11.25 lakh annually instead of the proposed ₹15 lakh.

Officials justified the revised hike as a modest adjustment, arguing that the fee hadn’t changed for nearly eight years. The original proposal was expected to generate ₹600–700 crore in annual revenue. With the revision, the state foregoes an estimated ₹400 crore.

While large players have welcomed the move, micro-distilleries expressed disappointment. Small-scale producers argued that uniform licensing fees disproportionately burden them, calling for a differentiated taxation model akin to that for microbreweries.

Wine store owners also voiced concerns, citing rising operational costs. Karnataka has over 4,000 CL-2 wine stores, including 1,400 in Bengaluru, many of which say the revised fees still strain their margins.

Despite criticism from smaller operators, the government maintains that the decision reflects a balance between revenue generation and industry support.