Global liquor giants sue Maharashtra over sharp tax hike, exclusion from lower tax category

Diageo and Pernod Ricard–backed industry group International Spirits and Wines Association of India (ISWAI) — which also counts Bacardi, Beam Suntory and Moët among its members — has filed a lawsuit against the Maharashtra government, challenging a steep tax hike on premium affordable liquor brands and their exclusion from a newly created lower-tax category for select local manufacturers.

ISWAI said the petition has been filed on behalf of all member companies.

According to the petition filed on November 14 and reviewed by Reuters, ISWAI has asked the Bombay High Court to strike down the policy or allow companies with foreign investment to participate in the lower-tax bracket. The court will hear the matter on December 9.

Maharashtra — which accounts for nearly 7% of India’s premium liquor consumption and hosts major Diageo and Pernod facilities — introduced policy changes between June and August to incentivise local investment. A new category, ‘Maharashtra Made Liquor,’ allows state-headquartered manufacturers with zero foreign ownership to sell products taxed at 270%.

In contrast, taxes on other premium brands with production costs below ₹260 per litre were raised sharply from 300% to 450%. Impacted labels include Diageo’s McDowell’s No.1, Pernod Ricard’s Royal Stag, Tilaknagar Industries’ Imperial Blue, and Allied Blenders & Distillers’ Officer’s Choice.

ISWAI’s filing argues that the state has created “an artificial competitive advantage” for a favoured group of firms. The Maharashtra government did not respond to Reuters queries but has publicly maintained that the policy will spur employment, boost investment, expand factory capacity and generate an additional $1.56 billion in annual revenue.

United Spirits, Diageo’s India unit, said Maharashtra remains a key market and expressed hope for a “level playing field.” Pernod Ricard, ISWAI, Tilaknagar and ABD did not respond to requests for comment, Reuters said.

India, the world’s eighth-largest alcohol market with annual revenues of $45 billion, continues to witness regulatory friction. Global liquor companies are also seeking $337 million in overdue payments from a Telangana state-run depot and face tighter advertising rules along with multiple antitrust probes.