Uttar Pradesh is rolling out the welcome mat for alcohol manufacturers, and it could change the fortunes of two home grown brewers.
When India’s largest state decides to roll out the welcome mat for alcohol manufacturers, investors would do well to pour themselves a drink and pay attention. Uttar Pradesh, a market of over 230 million people, has just unveiled an excise policy so aggressively pro-industry that it amounts to a structural pivot — one that could send shares of domestic spirits makers soaring.
Emkay Global Financial Services, in a sector report published today, argues that UP’s new framework represents far more than routine policy tinkering. “UP Excise Policy 2026-27 presents a structural shift that favors transparency, premiumization, and exports-led growth,” the brokerage notes, adding that the state is positioning alcoholic beverages as a “structural opportunity” rather than a sin to be taxed into oblivion.
The timing couldn’t be better. UP’s decision to cut fees, slash export costs, and modernize its supply chain offers rare clarity in an otherwise murky sector.
The Export Play
The headline grabber in UP’s new framework is a dedicated three-year export policy running through 2029. Bottling fees and export pass fees have been slashed to just one rupee per bulk liter. Grain-based extra neutral alcohol can now be exported at the same nominal rate.
“To promote UP-made brands on the global platform, the state has slashed bottling fee and export pass fee to minimum levels and reduced the export fee for grain-based ENA to only Re1/bulk liter,” Emkay Global observes. “This is a major tailwind for Radico Khaitan, which already has a strong export footprint. Radico is likely to gain cost advantage in exporting ENA from its facility.”
Rewiring the Supply Chain
Beyond exports, UP is fundamentally changing how liquor moves through its distribution system. The state is pivoting toward a “cash and carry” retail model that eliminates credit risk for wholesalers while shifting duty obligations to the point of retail procurement.
The wholesale license fee has been slashed to Rs200,000. “This change is explicitly aimed at reducing financial burden on wholesalers and linking part of the fee to actual sales through a variable duty component rather than only a high fixed fee,” says Emkay Global.
The entire supply chain must now transact through a centralized excise portal — a quiet revolution benefiting established players with clean operations.
Premiumization and Local Liquor
Label registration fees have tumbled to Rs35,000 per label, making it economically viable to introduce super-premium domestic brands into premium retail outlets. Wine fees have been reduced, “aiding price reduction in domestic wines,” according to the report.
State-made liquor categories offer another growth avenue. UP has approved a new 100ml pack at Rs50, creating an accessible entry point. The state has also tightened rules on retail brand concentration — reducing the stocking cap from 85% to 75%.
“Radico is well placed to benefit from such developments,” says Emkay Global. “The reduced SKU size in UPML is likely to aid growth, wherein Radico has 50% share.”
Modest Tax Hikes, Big Relief
Special additional royalty fees on Indian-made foreign liquor have increased by Rs10 across slabs. But Emkay Global dismisses volume concerns, noting that “tax hikes in the state budget have been relatively low versus expectations of sharp hikes.”
The brokerage expects other states to follow suit. “We anticipate sector valuation comfort to emerge as other states follow this muted-tax trajectory.”
The Investment Case
“While beneficial for all players through increased transparency, Radico Khaitan stands as the primary beneficiary of regulatory shifts in its fortress state,” Emkay Global states plainly. “We continue to favor Radico Khaitan and Allied Blenders in our alcoholic-beverage sector coverage.”
The brokerage maintains buy ratings on both names. Allied Blenders & Distillers, currently trading at Rs529, carries a target price of Rs800 — implying upside of 51%. Radico Khaitan, at Rs2,789, has a target of Rs3,700, representing potential gains of 33%.
