Drinks giants club together to sue Indian state
A group of global drinks groups are suing the government of Indian state Telangana for US$400 million they claim it owes them. Ron Emler reports.
Local subsidiaries of major companies including Diageo, Pernod Ricard, Heineken and Carlsberg have accused the southern state of Telangana of breaching accounting rules over dues they say are owed by the state government.
Telangana is India’s biggest beer-consuming state by volume, and operates a state monopoly on alcohol so producers are permitted to sell only to official warehouses, which then sell on to the retail trade.
The effect is that the brewers and distillers are forced to wait for the state government to make payments for their goods.
Source of dispute
This has long been a source of dispute and last year Telangana officials acknowledged they owed money to liquor producers without giving reasons for the delayed payments. Last November, drinks companies threatened to halt alcohol shipments, saying: “Non-clearance of old payments and delay in current payments have created a situation which is not sustainable for the industry.”
The state government has recently started a system in which it pays the latest invoices from producers first, leaving older debts to accumulate.
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Under the supply contracts, early payments can be made at a slightly lower rate, but that has to be agreed with the companies. They say they have not agreed to the state government imposing this unilateral action.
Risk of “bad debt”
Industry groups such as the Brewers Association of India, the Confederation of Indian Alcoholic Beverage Companies and the International Spirits and Wines Association of India, which together represent 80% of the country’s liquor, beer and wines market, have issued a joint statement raising concerns about the risk of bad debts.
“Old outstanding (payments) may remain unpaid turning into bad debt over time thus creating massive financial burden and risk for the industry,” they said. Not paying old invoices first was “fraught with non-compliance” with accounting standards, they said.
The statement claimed that the total sum owed from November 2025 to April 2026 was IR37.25 billion (US$392 million).
The Telangana government did not respond to requests for comment from Reuters, and neither did Diageo, Pernod, Heineken’s United Breweries, Carlsberg and Anheuser-Busch InBev.
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