Telangana's Unpaid Alcohol Dues Cross ₹3,900 Crore, Industry Sounds Alarm
Major alcohol industry associations have issued a stark warning to the Telangana government. They demand immediate clearance of long-pending dues totaling ₹3,900 crore owed to state suppliers. This urgent call comes just ahead of the World Economic Forum 2026 in Davos.
The Brewers Association of India (BAI), the International Spirits and Wines Association of India (ISWAI), and the Confederation of Indian Alcoholic Beverage Companies (CIABC) made this demand in a joint statement on January 16. They represent nearly all major alcohol producers in the country.
Mounting Financial Pressure and Broken Promises
The Telangana State Beverages Corporation Limited (TGBCL) owes this substantial amount to suppliers. Alarmingly, about ₹900 crore of these dues have remained unpaid for over a year. This situation creates severe working capital stress for manufacturers.
Industry leaders highlight a pattern of broken commitments. They met with the Telangana chief minister in July 2024. He reportedly asked for up to three months to resolve the payment issues. However, by January 2025, payments had stopped once again.
"This has now become a slightly precarious situation," a senior alcohol industry executive told Mint, requesting anonymity. The executive revealed that suppliers had even suggested offsetting pending dues with proceeds from the state's retail license auctions.
A Direct Hit to Investor Confidence and State Investments
The financial strain is already showing tangible effects. Industrial investments in Telangana more than halved in the 2024-25 fiscal year. They dropped sharply to ₹13,730 crore from ₹28,100 crore in the previous year.
This decline signals a clear erosion of investor confidence. The industry bodies argue that clearing dues and restoring the contractual 45-day payment cycle is fiscally prudent. It is essential for protecting state revenues, thousands of jobs, and ensuring supply continuity.
The alcohol sector delivers predictable, recurrent, and large-scale revenues to the Telangana exchequer. It is the state's third-largest revenue contributor, bringing in approximately ₹2,300 to ₹2,600 crore every single month.
The Critical Role of Alcohol Revenue in Telangana
Telangana ranks among India's top five alcohol-consuming states. This makes a steady supply absolutely crucial for both revenue stability and market equilibrium. The sector supports around 70,000 direct and indirect jobs across various functions.
These jobs span brewing, distillation, packaging, logistics, and retail. Excise revenue from alcohol constitutes a key financial source for the state government. In India, liquor pricing, taxation, and distribution fall entirely under state jurisdiction.
Telangana's excise revenues have seen massive growth over the past decade. They increased more than four-fold, from around ₹9,000 crore in 2013-14 to nearly ₹38,000 crore in 2023-24. The state also collected over ₹3,000 crore in October 2025 alone through application fees for liquor retail licenses.
Recent Escalations and Supply Chain Disruptions
The warning about dues is not new. Industry bodies first flagged unpaid dues of ₹3,151 crore in October 2025. They cautioned that delays could disrupt liquor availability during the peak festive season spanning Diwali, Christmas, and New Year.
The financial strain has since intensified significantly. Mint reported on January 8 that United Breweries Ltd, which controls nearly 70% of Telangana's beer market, suspended supplies to TGBCL. The company cited sustained operating losses, unpaid dues, and a lack of price revision since FY20 despite sharp increases in input costs.
Beer prices in Telangana remain significantly lower than in neighbouring states. This price disparity squeezes manufacturers' margins further. TGBCL, established after the state's creation in 2014, has not revised prices or cleared backlogs despite repeated appeals from industry players.
Broader State Fiscal Challenges and Industry Appeals
Analysts familiar with the situation describe it as a state government fiscal problem. "There are multiple departments that have not been paid their dues by the Telangana government," an analyst tracking the developments told Mint, also requesting anonymity.
The delays were linked to the state's fiscal pressures in early 2024. At that time, revenues lagged behind projections even as expenditure rose due to welfare commitments. Some suppliers had temporarily stopped selling to Telangana to recover dues, but major players cannot afford to ignore the market.
Telangana accounted for 9% of total Indian-made foreign liquor (IMFL) spirit volumes as of FY23, according to a Jefferies report. Industry associations have urged the government to use proceeds from retail liquor licence auctions, expected to raise around ₹3,000 crore, to clear pending payments.
They also seek a temporary reduction in advance excise duty to ease working-capital stress. The associations stress that timely payments are essential to maintain the sector's health, which is vital for Telangana's economy and employment landscape.
