Lakshadweep, the scenic archipelago in the Arabian Sea, has officially repealed its 47-year-old alcohol prohibition, ushering in a new era of regulated liquor sales. This significant policy shift, formalized by the Union government through a Gazette notification on June 5, aims to transform the Muslim-majority territory into a more competitive global tourism destination, directly challenging rivals like the Maldives.
End of a Nearly Five-Decade Ban
Since 1979, Lakshadweep operated under the Lakshadweep Prohibition Regulation, which largely banned the sale and consumption of alcohol. This ban was primarily rooted in the religious and cultural ethos of the islands, where approximately 97% of the population identifies as Muslim. While the prohibition was extensive, certain government-run bars and tourist resorts on islands such as Kavaratti and Bangaram had limited exemptions for visitors and officials.
Local communities and governments consistently supported the ban, citing its alignment with local beliefs and a desire to prevent potential social and law-and-order issues linked to alcohol consumption.
The New Lakshadweep Excise Regulation, 2026
The old prohibition law has been replaced by the Lakshadweep Excise Regulation, 2026. This new framework introduces a comprehensive licensing system covering the manufacture, possession, import, export, transport, purchase, sale, and consumption of alcohol. Government companies and agencies are also eligible to obtain licenses for importing and selling liquor.
However, the new rules are not without stringent controls. High excise duties have been imposed: 400% on Indian Made Foreign Liquor (IMFL) and foreign liquor, 200% on beer, and 80% on wine. For context, Delhi charges 25% VAT across various liquor categories. The Administrator retains significant authority, including the power to control drinking, set limits on purchases, and even ban alcohol in specific areas or across the entire territory if deemed necessary. Selling alcohol to individuals under 21 years of age remains strictly prohibited.
Boosting Tourism: The Driving Force
The primary catalyst for this historic Lakshadweep alcohol law change is the government's strategic push to bolster the islands' tourism sector. Officials have long recognized that strict alcohol regulations placed Lakshadweep at a disadvantage compared to popular international destinations like the Maldives, where alcohol is readily available in tourist zones. The vision is to attract a broader range of domestic and international visitors seeking a more comprehensive holiday experience.
A significant impetus came in January 2024 when Prime Minister Narendra Modi visited Lakshadweep, sharing captivating images of its beaches and promoting activities like snorkeling. This high-profile endorsement led to a dramatic surge in tourist interest. Data reveals a substantial increase in tourist arrivals, rising from 3,875 in 2020 to an impressive 68,328 in 2024, with the largest jump occurring after the Prime Minister's promotional efforts.
Evolution of Policy
Efforts to ease alcohol restrictions in Lakshadweep have been underway for several years. In 2021, a proposal to expand alcohol availability beyond Bangaram Island faced considerable local opposition. This was followed by a draft excise rule in 2023, which outlined a proper licensing system. More recently, government guesthouses on Chetlat and Bitra islands were permitted to serve alcohol to permit holders under the existing, limited framework.
The Centre's decision to repeal the 1979 law and implement a controlled alcohol system reflects a nuanced approach, aiming to balance the cultural and religious sensitivities of the local population with the economic imperative of tourism growth. Officials note that controlled alcohol systems operate successfully in other Muslim-majority regions globally, suggesting a viable path forward for Lakshadweep.