Kerala is, as per conservative estimates, losing over ₹100 crore in Goods and Services Tax (GST) revenues annually due to the importing of ethanol meant for petrol blending and for industrial uses from other states, including Karnataka and Maharashtra, Excise Minister M.B. Rajesh told the Assembly on Monday (March 3, 2025).
Replying to questions, he said that this revenue outflow can be stemmed by manufacturing spirit within the State. The Question Hour almost turned into a debate between the Minister and Opposition MLAs over the government’s decision to allow a liquor major to establish manufacturing units in Palakkad district.
Mr. Rajesh said that the four major petroleum companies imported 30.26 crore litres of Ethanol to Kerala in 2024. In addition, industrial Ethanol is also being imported, for which figures are not currently available. There is no GST on liquor or spirit meant for human consumption, but Ethanol used for petrol blending has a GST of 5%.
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As much as 9.21 crore litres of spirit (extra neutral alcohol) meant for manufacturing liquor was imported to the State in 2024. Out of this, 2.68 crore litres came from companies based in Maharashtra, while Karnataka-based companies were placed second. Replying to a question, the Minister said that some of these companies were run by Ministers and MLAs in these States.
“The government’s aim is to create jobs, bring investment and increase the state’s revenue. Why is the Opposition so keen on ensuring that we should import spirit from other states? Our policy is that the State need not suffer such loss in revenue,” he said.
He told the Assembly that the Oasis Commercial Private Limited had submitted its application for starting a liquor manufacturing plant on November 30, 2023, while the government accorded preliminary clearance only on February 16, 2025 after various levels of scrutiny. The government has not held any meetings with the company officials.
He reiterated that groundwater will not be exploited for the project as the required water will be provided from Malampuzha Dam through the existing KINFRA Water Supply Scheme for industrial uses, which was launched during Oommen Chandy’s tenure as the Chief Minister, and through rainwater harvesting. Currently, 10 Million Litres per Day (MLD) of water is being provided for KINFRA.
