Representative image of people buying liquor from a store in Bengaluru.
Credit: DH Photo
Bengaluru: The Karnataka finance department has issued draft rules on auctioning defunct excise licences with which the Siddaramaiah administration hopes to rake in around Rs 500 crore amid fiscal stress.
To mobilise additional resources, the government wants to auction defunct CL-2 (retail liquor shop) and CL-9 (bar & restaurant) licences. Authorities are also planning to auction unused CL-11(C) licences, which are given to retail outlets run by the Mysore Sales International Ltd (MSIL).
There are 579 such licenses that will go under the hammer, according to Excise Minister RB Timmapur’s office.
Licences will be auctioned online and awarded to those who make the highest bid, the draft rules say.
Karnataka has not issued new CL-2 and CL-9 licences since 1992, making them prized possessions. There are 3,995 CL-2 and 3,637 CL-9 licences, which are renewed annually.
Due to the freeze on new CL-2 and CL-9 licences, the existing permits are sold at huge prices every year, running into a few crores, including bribes. The government, however, gets only the annual fees for these licences, which ranges from Rs 4-6 lakh for CL-2 and Rs 4-7.5 lakh for CL-9.
“In the Bengaluru market, a licence is sold for as high as Rs 3.8 crore,” Chief Minister’s Economic Advisor Basavaraj Rayareddi told DH. “In the auction, we expect up to Rs 3 crore per licence. Outside Bengaluru, a licence may fetch up to Rs 1 crore,” he said. “We can expect around Rs 500 crore from the auction.”
According to the draft rules, two new categories will be created for the auctioned licences -- CL-2A and CL-9A.
The proposed rules also allow existing or valid licences to be transferred to the legal heirs of holders in the event of their death.
The government’s reliance on excise revenue is growing every year. In 2024-25, the government collected Rs 35,783.54 crore in excise revenue. In the current fiscal, the government’s target is Rs 40,000 crore. Up to August, the excise revenue collection stood at Rs 16,358 crore.
Chief Minister Siddaramaiah had announced in the 2025-26 Budget the allotment of "unused liquor licenses through a transparent electronic auction" which he said would "aid in additional resource mobilisation to the state".