With the state struggling to deal with a growing alcohol abuse problem, the Kerala government has announced a ban on alcohol that will come into effect over the next 10 years.
The state government warned that alcohol abuse was becoming a danger to society as it unveiled a plan to ban its sale and consumption within 10 years.
It said no new licences to sell alcohol would be granted, while many of the state's 720 bars and restaurants would not have their licences renewed.
From next year only five-star hotels will be granted licences.
"It is certain that (alcohol) still continues as a social danger. This is having an adverse effect," said Kerala Chief Minister Oommen Chandy late Thursday.
"Kerala should get ready to imbibe the essence of (a) total liquor ban in the state."
Kerala has India's highest annual per-capita alcohol consumption at 8.3 litres.
It is also one of the country's biggest tourist draws thanks to its palm-fringed white sandy beaches and tranquil rivers lined with paddy fields.
Tourism officials said they had not been consulted and warned that exempting five-star hotels would not be enough to save the industry, with many tourists staying in small guesthouses.
"By this, we are denying the facility of having beer and wine to tourists in hotels with four-star and below category," a Confederation of Tourism Industry Kerala official told The Hindu daily.
"This will affect domestic and international tourist arrivals and send a wrong message about the destination."