Diageo, Pernod Ricard Challenge Maharashtra’s Liquor Tax Hike in Court

Diageo and Pernod Ricard’s Indian lobbying body, the International Spirits and Wines Association of India (ISWAI), has filed a lawsuit against the Maharashtra government over a steep excise tax hike on affordable premium liquor brands and the exclusion of foreign-invested companies from a newly introduced lower-tax category. The state’s new “Maharashtra Made Liquor” classification—limited to manufacturers headquartered in Maharashtra with zero foreign investment—offers a reduced 270% tax rate, while taxes on other similar products have been raised from 300% to 450%. Affected brands include Diageo’s McDowell’s, Pernod’s Royal Stag, Tilaknagar Industries’ Imperial Blue, and Allied Blenders and Distillers’ Officer’s Choice.

In its petition, ISWAI argues that the state has created “an artificial competitive advantage” for select local players, calling the policy discriminatory and a barrier to fair trade. Maharashtra, which accounts for 7% of India’s premium liquor consumption and hosts major factories of Diageo and Pernod, is a crucial market for global spirits companies. Industry groups report that sales of the impacted brands have already fallen by 35–40% since the tax increase took effect. The case is scheduled to be heard by Mumbai’s High Court on December 9.

The Maharashtra government has defended the policy, saying it aims to stimulate local investment, increase jobs, expand manufacturing capacity, and generate an additional $1.56 billion annually in revenue. Meanwhile, global alcohol companies are simultaneously dealing with other challenges in India, including $337 million in pending dues from Telangana’s state-run depot, proposed stricter advertising limits, and ongoing antitrust investigations.

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