Telangana’s ₹3,900 crore of unpaid dues threaten investments, alcohol companies say

In a joint statement on 16 January, the Brewers Association of India (BAI), the International Spirits and Wines Association of India (ISWAI), and the Confederation of Indian Alcoholic Beverage Companies (CIABC) said the Telangana State Beverages Corporation Limited’s (TGBCL’s) dues had crossed ₹3,900 crore, with about ₹900 crore pending for over a year.

“The alcohol sector delivers predictable, recurrent, and large-scale revenues to the state exchequer. Clearing dues and restoring the 45-day contractual payment cycle is fiscally prudent and essential to protect revenues, jobs and supply continuity," the three associations said in their joint statement. Together, they represent nearly all major alcohol makers in India including Diageo, Pernod Ricard, AB InBev, United Breweries, Allied Blenders, Radico Khaitan and Sula Vineyards.

The latest warning comes amid growing stress in Telangana’s alcohol supply chain, as Mint reported in October 2025, when industry bodies flagged ₹3,151 crore in unpaid dues to suppliers and cautioned that delays could disrupt liquor availability during the festive season spanning Diwali, Christmas and the New Year, when sales typically peak.

The long-standing issue has already dented investor confidence. Industrial investments in the state more than halved to ₹13,730 crore in 2024-25 from ₹28,100 crore in the previous year.

Telangana’s excise revenues have increased more than four-fold over the past decade, from around ₹9,000 crore in 2013-14 to nearly ₹38,000 crore in 2023-24, the statement said. The state also collected more than ₹3,000 crore in October 2025 alone through application fees for liquor retail licences, and excise revenue in December 2025 was an all-time high, it added.

Liquor pricing, taxation and distribution fall entirely under state governments in India, and excise constitutes a key revenue source. The sector is especially important to Telangana as the third largest contributor to its revenues, bringing in about ₹2,300-2,600 crore every month. It also supports around 70,000 direct and indirect jobs across brewing, distillation, packaging, logistics and retail, according to the joint statement. Telangana is among India’s top five alcohol-consuming states, making supply continuity critical both for revenues and market stability.

‘Precarious situation’

Senior executives and analysts familiar with the developments said the state had initially paid its monthly dues on time, but that only lasted a short while.

“Alcohol industry CEOs and representative bodies had met the Telangana chief minister in July 2024 and he had asked for up to three months to resolve the issue and ensure payments are made on time," a senior alcohol industry executive told Mint, requesting anonymity. “By January 2025, these payments had stopped again. This has now become a slightly precarious situation. We had asked the government to offset some of the pending dues with the proceeds from their retail license auctions," the executive added.

“This is simply a state government fiscal problem," an analyst tracking the developments told Mint, who also requested anonymity. “There are multiple departments that have not been paid their dues by the Telangana government. Some suppliers had stopped selling to Telangana for a short while to try and recover some of their dues. But major suppliers cannot afford to ignore Telangana when sales of spirits are hurting in Maharashtra and of beer in Karnataka."

Spirits sales in Maharashtra have been suffering due to a hike in taxes, and the introduction of a Maharashtra Made Liquor (MML) policy last year made national alco-bev makers wary. Meanwhile, Karnataka hiked taxes on beer, hurting the sales of all major brewers in the state. Telangana accounted for 9% of total Indian-made foreign liquor (IMFL) spirit volumes as of FY23, equities brokerage firm Jefferies said in a report in September 2025.

‘Use auction proceeds’

Industry associations had earlier urged the government to use the proceeds of retail liquor licence auctions, which are expected to raise around ₹3,000 crore, to clear pending payments and ease working-capital stress, while also seeking a temporary reduction in advance excise duty.

Financial strain in the sector has since intensified. Mint reported on 8 January that United Breweries Ltd, which controls nearly 70% of Telangana’s beer market, suspended supplies to the state-run Telangana State Beverages Corporation Ltd (TGBCL), citing sustained operating losses, unpaid dues, and the lack of a price revision since FY20 despite sharp increases in input costs. Beer prices in Telangana remain significantly lower than in neighbouring states, squeezing manufacturers’ margins.

TGBCL, set up after the state’s creation in 2014, has not revised prices or cleared backlogs despite repeated representations by industry players. The delays were linked to the state’s fiscal pressures in early 2024, when revenues lagged projections even as expenditure rose because of welfare commitments, Mint reported.

Soumya Gupta contributed to this report.