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Getting a drink in Karnataka will now cost you more: An additional excise duty of 4% could be a bane

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on

BENGALURU: Stick to a glass of wine on your next outing at that hip watering hole. A peg of whisky, rum or vodka will need deeper pockets now. Karnataka chief minister HD Kumaraswamy has proposed an additional excise duty of 4% on hard liquor in his maiden Budget.

Earlier in April too, duties were raised by 8%, which adds up to a total of 12% hike on liquor for the year 2018-19. What’s more, the hike in fuel cost will add to the impact.

Restaurateurs and hospitality experts see the price list in restaurants and bars going north.

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Manu Chandra, restaurateur and head of the National Restaurant Association of India (NRAI) Bengaluru chapter, said, “Liquor is the soft target in every budget. Overpolicing is making it difficult for restaurateurs to sustain. From new rules like not being permitted to play music at eateries, fire-safety clearances, and challenging licences – woes just add on.”

Amit Roy of hospitality consultancy firm ThinkTanc notes that only way to combat and attain recovery is by increasing the menu price by 5%. “This will lead to an air of discontentment as consumers will be offended and footfall will reduce marginally.”

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The F&B industry here has already been hit by a series of challenges like procuring new entertainment licences, submitting occupational certificates and fire-safety clearances. The proposed duty hike is adding to the pandemonium, say alcobev experts.

“Karnataka State Beverages Corporation releases 5 crore cases of liquor per year. It has been witnessing a year-on-year growth of 0.5-1%. With the total of 12% hike in excise duty this year, the growth rate will cease completely,” says Arun Kumar Parasa, president of the Karnataka Brewers and Distillers Association.

He notes that demonetisation, GST, the Supreme Court ruling on highways and now, the new hike, will eat into their margins, however, nominally. “While repercussions will be known after another quarter, the industry is already on wafer-thin margins and any reduction in volumes due to the raise in duties and fuel will hit the industry hard,” he said. Observing how this move is not healthy for the F&B industry, food expert Aslam Gafoor said that establishments will see further dip in footfall. “Hospitality is a big revenue spinner. The government must ideally collaborate with the industry on licensing, regulations and policy-making.

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