The Congress-led government in Karnataka has proposed a new liquor tax policy that would base taxation on the actual alcohol content in beverages. If enacted, this would make Karnataka the first Indian state to adopt the Alcohol-in-Beverage (AIB) taxation model, similar to practices in Western countries. The proposed changes include increasing the basic excise duty to ₹1,000 per litre of pure alcohol from the current ₹50 per bulk litre of Indian Made Foreign Liquor (IMFL). This shift is expected to significantly increase prices for budget liquors, likely impacting low-income consumers, while premium spirits could see a price reduction of 5-15%. The number of tax slabs will also be reduced from 16 to eight, giving producers more control over pricing. Industry experts view this as a historic reform that could accelerate the trend towards premiumization in the liquor market, although smaller regional players may struggle with the increased costs.