It is determined by excise department of state governments. Actually it is two way sword. You loose some pricing power but ensures that there is no irrational pricing by any competitor.
This may give some idea
https://webcache.googleusercontent.com/search?q=cache:Dv7Xwt7jfhMJ:https://cag.gov.in/uploads/download_audit_report/2019/Chapter_4_Pricing_of_Liquor_of_Report_No_1_of_2019_Pricing_of_Production_and_Sale_of_Liquo.pdf&cd=3&hl=en&ct=clnk&gl=in
Those who are old enough will remember that prior to liberalization most prices including steel and cement were determined by government. And likes of Tata Steel and ACC were super profitable company because everyone wanted those brands. Post liberalization, market forces ensured that competitive pricing led to collapse of profits.
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