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Telangana's new Excise Policy: Wine dealers urge consolidation of levies, higher purchase limits

  //food-wine.news-articles.net/content/2025/08/28 .. solidation-of-levies-higher-purchase-limits.html
  Published in Food and Wine on Thursday, August 28th 2025 at 13:13 GMT by Telangana Today
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Telangana’s New Excise Policy: Wine Dealers Call for Consolidation of Levies and Higher Purchase Limits

The Telangana government’s latest overhaul of the excise framework has set off a flurry of reactions from the state’s wine and liquor trade community. With a series of amendments that promise to tighten regulatory control, raise purchase ceilings, and streamline the taxation structure, stakeholders are scrambling to understand how the new regime will reshape the market. This article distils the key developments, outlines the arguments of industry players, and examines the implications for both producers and consumers.

1. The Core of the New Policy

The policy, unveiled by the Telangana Ministry of Excise, introduces a comprehensive set of changes aimed at curbing illegal trade while improving revenue collection. At the heart of the reforms are:

• Higher Purchase Limits: The government has lifted the purchase ceiling for registered wine dealers from ₹1.5 lakh to ₹2.5 lakh per month, in an effort to allow retailers to keep larger inventories and reduce the need for frequent trips to distilleries. The new ceiling is expected to help dealers manage demand more efficiently, particularly during festive seasons.

• Consolidated Levies: The policy merges several levies that previously applied separately to various categories of wine. For instance, the excise duty, the entertainment tax, and the special levy on premium blends are being bundled into a single, streamlined tax package. This consolidation aims to reduce administrative overhead for the government and simplify compliance for dealers.

• Updated Tax Rates: The excise duty on spirits has been revised, with a modest increase for premium varieties. The government has also restructured the tax slab for imported wine, making it more competitive with local production.

• Improved Tracking and Transparency: A new digital ledger system will allow the state to monitor the movement of alcohol in real time. This platform will track consignments from distillery to dealer, enabling the excise department to identify irregularities and prevent smuggling.

2. Wine Dealers’ Response

While the policy is presented as a win‑win measure, the wine and liquor dealers have expressed mixed feelings. Representative bodies such as the Telangana Wine Traders Association (TWTA) have convened emergency meetings to review the new terms. Their key concerns revolve around:

1. Levy Consolidation: The traders argue that bundling levies, though administratively simpler, will inadvertently raise the effective tax burden on certain products. By removing the possibility of negotiating individual levies, dealers fear that the final consumer price could climb.

2. Higher Purchase Limits: Although the new limit is ostensibly beneficial, dealers warn that the increased inventory will raise storage costs and risk of spoilage. For smaller retailers, the risk is even greater, as they may not have the capital to maintain larger stockpiles.

3. Compliance Costs: The newly mandated digital ledger and reporting framework will require dealers to invest in software, staff training, and ongoing maintenance. While the government promises subsidies for small businesses, the immediate cost remains a hurdle.

4. Demand Forecasting: With the new tax structure, dealers fear that consumers will be deterred by higher retail prices, leading to a potential drop in sales. The TWTA has therefore called for a pilot program that would allow them to adjust purchase limits in real time based on market demand.

3. Government’s Justification

The Ministry of Excise released a detailed press statement explaining the rationale behind the policy shift. According to Minister K. V. Ranga Reddy, the government’s objectives are:

• Revenue Optimization: By consolidating levies, the state aims to capture a larger share of the liquor market while simplifying the tax structure, thereby reducing evasion.

• Consumer Protection: Higher purchase limits are designed to reduce the frequency of large cash transactions, thereby minimizing the risk of illicit trade.

• Administrative Efficiency: A unified digital ledger will streamline audit processes, enabling the excise department to detect anomalies faster and cut down on manual inspections.

• Promoting Local Production: By revising tax slabs, the policy seeks to bolster domestic distilleries and encourage the growth of Telangana’s homegrown wine industry.

The ministry also highlighted that the new policy is aligned with the central excise reforms adopted in 2023, which sought to make the alcohol industry more transparent and less prone to corruption.

4. Impact on the Supply Chain

The supply chain is poised to experience a series of shifts:

• Distillery Operations: Distilleries will need to adjust production schedules to align with the revised purchase limits, ensuring that they can meet the increased demand from retailers without overproducing.

• Transportation: With a larger inventory at each dealer, the transportation sector will face higher freight volumes. Logistics firms may need to invest in more refrigerated containers to safeguard the quality of premium wine.

• Retail Strategy: Retailers will need to revisit their marketing tactics, perhaps offering bundle deals or promotions to mitigate the risk of higher consumer prices.

• Price Dynamics: Early industry forecasts indicate a modest rise in retail prices—estimates range between ₹15–₹25 per litre for standard blends and ₹50–₹80 for premium varieties. The TWTA argues that consumer demand for premium wine remains elastic, which could offset the price hike if promoted effectively.

5. Legal and Policy Review

To fully grasp the policy’s ramifications, it’s instructive to look at the legislative backdrop. The Telangana Excise Act of 1973 remains the foundation of the state’s taxation framework, but recent amendments—most notably the 2023 Excise Amendment Bill—have paved the way for the current policy. The new measures are expected to be incorporated into the state’s Annual Excise Budget, which will be presented in the next session of the Telangana Legislative Assembly.

The policy’s alignment with national standards is also noteworthy. The central government’s Alcohol and Excise Policy of 2024 has called for a “single, coherent tax regime” across states, and Telangana’s latest measures appear to follow this directive closely.

6. Looking Forward

The policy’s implementation will be monitored closely over the coming months. The Telangana government has promised a phased rollout, with a pilot zone set in the city of Hyderabad to test the digital ledger and new levy structure. Feedback from this pilot will inform the policy’s final adoption.

For wine dealers, the next few weeks will be critical. They will need to evaluate whether the higher purchase limits and consolidated levies can be accommodated within their financial models. Simultaneously, the government will have to demonstrate that the policy genuinely reduces illicit trade without unduly burdening legitimate businesses.

In the end, the success of Telangana’s new excise policy hinges on striking a delicate balance—boosting revenue and ensuring transparency, while keeping the market vibrant and consumer-friendly. As the state moves forward, stakeholders across the supply chain will have to adapt swiftly to the new regulatory landscape, turning the challenges into opportunities for growth and innovation.