India’s Biggest Beer-Consuming State Owes Nearly $400M, Global Liquor Giants Say

A crescent moon is seen above the Telangana State Secretariat building the day before the first daily fast of the Islamic holy month of Ramadan on March 1, 2025, in Hyderabad, India. (AP Photo/Mahesh Kumar A.)

Some of the world’s biggest alcohol companies are warning that nearly $400 million in unpaid bills from an Indian state could become bad debt, highlighting the challenges of doing business in one of the industry’s most important growth markets.

Trade groups representing Diageo, Pernod Ricard, Heineken, Carlsberg and other major drinks producers say the southern Indian state of Telangana — the nation’s largest beer-consuming state — owes liquor suppliers about 37.25 billion rupees ($394 million) for products already delivered between December 2025 and April 2026.

The dispute centers on Telangana’s government-controlled alcohol distribution system. Like several states in India, Telangana requires liquor producers to sell products to state-run depots, which then distribute them to retailers. The arrangement leaves alcohol companies dependent on state governments for payment.

Industry associations representing roughly 80% of India’s beer, wine and spirits market issued a rare joint statement Friday warning that Telangana’s payment practices could create significant financial risks for suppliers.

According to the groups, the state has recently begun paying newer invoices ahead of older outstanding debts. While early payments can sometimes be made at discounted rates, industry representatives argue those arrangements typically require agreement from suppliers.

“Old outstanding payments may remain unpaid, turning into bad debt over time,” the organizations said, adding that the practice could create a “massive financial burden and risk for the industry.”

The Telangana government did not respond to Reuters’ requests for comment.

The dispute underscores a growing tension in India, which remains one of the few major global alcohol markets still generating significant consumption growth. As beer, spirits and wine sales stagnate or decline in many Western markets, multinational producers increasingly view India as a critical source of future growth.

However, the country also presents unique challenges. Alcohol regulations vary by state, taxes are among the highest in the world, and producers often face complex legal and regulatory hurdles.

Several global beverage companies are already navigating separate disputes in the country. Pernod Ricard is fighting a $314 million tax demand and remains involved in an antitrust case, while Anheuser-Busch InBev is contesting a competition law matter.

The latest payment dispute comes as India is projected to become one of the most important alcohol markets globally over the next decade. Recent forecasts from IWSR suggest India could surpass the United States as the world’s second-largest alcohol market by consumption, trailing only China.

For global drinks companies betting heavily on India’s growth story, getting paid may be becoming just as important as growing sales.