CIABC writes to all State Governments seeking immediate price revision

The Confederation of Indian Alcoholic Beverage Companies (CIABC) has submitted representations to all State Governments seeking a “reasonable price revision” for Indian Made Foreign Liquor (IMFL) and wine products in response to escalating input costs triggered by supply chain disruptions arising from the ongoing Middle-East crisis.

Anant S. Iyer, Director General of the Confederation of Indian Alcoholic Beverage Companies (CIABC), has urged State Governments to consider allowing a revision in product pricing due to the highly volatile geopolitical environment in the Middle East. The region, which accounts for nearly 20 percent of global crude oil supply and serves as a critical logistics and supply-chain hub for India, has been significantly impacted by the ongoing conflict, leading to widespread disruptions across global trade routes.

The crisis has intensified inflationary pressures across multiple supply chains, with a pronounced impact on petroleum products, transportation logistics, and packaging materials. In addition, glass manufacturing units are facing severe cost stress and have already sought price adjustments. Similar upward pressure has been observed in PET and aseptic packaging segments, further increasing overall production costs for manufacturers in the alcoholic beverage sector.

Geopolitical and Energy Volatility

The ongoing geopolitical instability in the Middle East has significantly destabilized key energy corridors. The Indian Crude Oil Basket has surged to $112.47 per barrel as of May 6, 2026, compared to $69.01 per barrel in February 2026, reflecting an almost twofold increase since the onset of the conflict. This escalation is largely attributed to supply disruptions and heightened risk premiums in global crude markets.

The near-complete disruption of the Strait of Hormuz has further aggravated the situation, affecting approximately 20 percent of global oil and petrochemical flows. This has led to immediate supply shortages and heightened volatility in input costs for downstream industries in India.

Currency fluctuations have added another layer of cost pressure, with the Indian Rupee weakening to approximately Rs 95 per US dollar. This depreciation has significantly increased the landed cost of imported raw materials and intermediate goods required by the industry.

Packaging and Polymer Cost Escalation

The packaging and polymer sectors are currently experiencing extreme inflationary conditions. Domestic petrochemical producers such as BPCL, RIL, and IOCL have implemented frequent price revisions in response to rising naphtha costs and disruptions in Middle Eastern supply chains.

Polypropylene used in plastic caps has witnessed a cumulative increase of approximately Rs 30 per kilogram, representing a nearly 30 percent rise since February 2026. This includes a sharp individual increase of Rs 12 per kilogram effective March 10, 2026. Similarly, high-density polyethylene has seen a cumulative rise of Rs 23 per kilogram, also approximately 30 percent over the same period, driven by supply constraints resulting from halted imports and force majeure declarations in the Gulf region.

PET resin prices have increased by Rs 15 per kilogram, or around 20 percent since February 2026, primarily due to rising costs of PTA and MEG feedstocks, which are directly linked to crude oil price movements. Paperboard packaging materials are also under pressure, with recycled fibre availability tightening significantly. Imported wastepaper logistics have become more expensive, with freight rates increasing by approximately $400 to $1,500 per container due to global shipping disruptions.

Energy, Metals, and Industrial Inputs

Aluminium prices, reflected in the London Metal Exchange cash settlement rates, have risen to $3,406 per metric tonne, marking an increase of approximately 8 percent since late February 2026. Physical premiums remain elevated due to shipping diversions away from the Strait of Hormuz.

Indonesian coal prices (GAR 6500) have surged by more than 20 percent, driven by global energy shortages and production constraints. This escalation has significantly impacted thermal energy costs across manufacturing industries dependent on coal-based energy inputs.

The glass manufacturing sector is also under significant pressure due to restricted natural gas supply to key production hubs such as Firozabad, where contracted supply has reportedly been reduced to approximately 60 percent. This has forced manufacturers to rely on expensive spot LNG and LPG procurement. Consequently, glass prices have increased by 10 to 20 percent. In parallel, commercial LPG prices have also risen sharply, with 19 kg cylinders increasing from approximately Rs 1,800 pre-crisis to around Rs 3,000 as of May 2026.

Logistics and Freight Pressures

International logistics have been severely affected by the ongoing geopolitical tensions. Ocean freight rates have increased substantially due to rerouting of vessels and heightened risk premiums. Shipping companies have introduced additional “conflict surcharges” on routes connected to the Middle East and the Indian subcontinent.

The situation remains highly volatile, and full normalization of supply chains is expected to take considerable time due to significant damage to ports and associated infrastructure in the affected regions.

Industry Appeal for Price Revision

In light of these combined cost pressures, CIABC has urged State Governments to permit a reasonable revision in Ex-Distillery/Winery Prices (EDP/EWP) for IMFL and wine products. The Confederation has stated that such revisions are necessary to offset unprecedented increases in production and logistics costs.

CIABC further noted that a calibrated adjustment in EDP, along with corresponding revisions in excise slabs, would have only a limited impact on consumer maximum retail prices while ensuring the long-term financial sustainability of the manufacturing ecosystem. The organization emphasized that the alcoholic beverage industry remains a significant contributor to State revenues and economic development.

The Confederation has reiterated that a pragmatic and timely policy response from State Governments will enable continued investment, operational stability, and sustained fiscal contribution from the sector.