A quiet crisis is brewing in Phuentsholing demand. Buyers from neighbouring Jaigaon routinely crossed into Bhutan, drawn by competitive pricing and convenience. Today, that steady flow has thinned to a trickle.
The owner of Lhaki Liquor Shop summed up the abrupt shift bluntly: “Unlike before, I now receive only three to five customers in a day. Previously, I used to get hundreds of customers. Most of my customers are from the border area of Jaigaon in India, but now they feel the prices are too high.”
She added, “I try to convince my neighboring customers that the prices are justified, but they are hesitant now. They think the Bhutanese shopkeepers are selling at high prices.” The frustration is tangible — not because demand for alcohol has disappeared, but because price sensitivity has reshaped buying behavior almost overnight.
Tika Devi, another retailer, described the same experience. “The number of visitors at my shop has decreased drastically. Many customers from Jaigaon come to ask if the prices have gone down. When I tell them prices are still high, they buy very limited stock or leave without purchasing.”
She noted a shift in consumer preference toward cheaper options. “Most customers prefer beer over hard drinks. Hard drinks are not selling much because Indian customers tend to buy small bottles, and only a few Bhutanese customers purchase hard liquor anymore.”
For shopkeepers reliant on daily turnover, the slowdown cuts deep. Dema, another retailer, voiced the tension between policy objectives and livelihood realities. “My sales have decreased significantly. I believe the high taxes are a good thing for the government, but for us, it’s tough. My family depends on this business, and these losses are hard to bear. I hope the government eases the tax policies soon.”
The impact extends across the border as well. Santosh Gupta, a longtime Jaigaon resident, described the economic flip: “We used to buy alcohol from Bhutan because it was cheaper than India. But now, with the increased prices, it’s more expensive in Bhutan than in India. It’s quite surprising.”
He believes taxation is central to the slowdown. “If the excise tax could be reduced, it would help us. I support GST, but the current excise duties are too high—they are hurting the alcohol businesses in Phuentsholing.”
The numbers are stark. Popular Lagar beer has jumped from Nu 60 to Nu 90. Hard liquor shows an even sharper increase — bottles like Rock Bee, once around Nu 180, now hover near Nu 500. For frequent buyers, the changes are impossible to ignore.
From a policy perspective, the government frames the situation differently. The Department of Revenue and Customs maintains that excise duties are intended not just to raise revenue but to promote healthier consumption patterns. Alcohol, tobacco, and similar goods are targeted specifically to reduce harmful use without destabilizing the broader economy.
Officials explain that fixed per-unit excise taxes — rather than percentage-based levies — create clearer price signals, making consumers more aware of the cost of high-risk products. The approach aligns with public health strategies promoted globally, including recommendations from the World Health Organization, which supports specific excise taxes as an effective deterrent to excessive consumption.
On paper, the system is logical: manufacturers and importers pay the tax, costs pass through to retail pricing, and consumers adjust their habits. On the ground in Phuentsholing, however, the shift is colliding with economic realities. Shopkeepers operate on thin margins, and sudden price shocks upset the delicate balance between affordability and sustainability.
The wider economy feels the ripple. Alcohol retail is tightly interwoven with border commerce — when bottle sales drop, so does foot traffic, affecting nearby shops, transport providers, and informal vendors who rely on cross-border shoppers. A slowdown in alcohol sales sends shocks far beyond the liquor counter.
Still, shopkeepers cling to cautious optimism. Dema said, “It’s tough now, but I believe the situation will ease soon as consumers become more aware of what is happening regarding excise duties on these products.”
For now, Phuentsholing’s alcohol trade sits at a crossroads — caught between public health policy and the realities of a border-town economy. Shelves remain stocked, but the rush is gone. In its place is a tense waiting game, where every sale counts, and every customer who walks away signals the challenges of a marketplace in flux.
Sherab Dorji
From Thimphu
