Consumers of scotch whisky and gin may no longer find their favourite alcohol brands pinching their wallets as import duty on these products will be halved to 75% from 150% as part of the India-UK Free Trade Agreement (FTA) signed on Thursday. However, this will happen in a staggered manner, meaning the duty will drop to 110% in the first year, followed by annual
cuts down to 75% by the tenth year. UK cosmetics, soft drinks, perfumes and personal care products, on the other hand, will see average Indian import duties drop from 15% to 3%, say tax experts, following the FTA.
Outlook for British brands
The implications are significant. Indian consumers may see a surge of British brands across consumer segments from alcohol to soft drinks, cosmetics to personal care making a beeline for the country, thanks to the landmark deal which was signed after three years of negotiation. But while Indian arms of British firms such as Diageo and The Body Shop have welcomed
the India-UK FTA, domestic liquor companies have raised concerns about the agreement.
The Confederation of Indian Alcoholic Beverage Companies (CIABC), which represents these firms, said the interests of the domestic alcohol industry were not reflected in the trade deal.
“Though lowering of import duty on scotch will help the domestic industry—as scotch used to produce blended products will also get cheaper—we hope that the government will ensure that scotch whisky and other spirits (BIO-bottled in origin) are not dumped at low import prices. This could hurt the year-on-year growth of premium and luxury Indian brands,” Anant Iyer, director general, CIABC, said.
Experts POV
Industry officials said that CIABC had recommended an import duty cut of 100% on scotch whisky and gin in the first year and a gradual reduction to 50% in 10 years. This has not been considered, they say, adding that cheaper bottles of scotch whisky and gin will increase competitive intensity in the domestic market.
Indian beauty retailers such as Nykaa, Reliance Tira, Shoppers Stop, Myntra and Amazon, meanwhile, which sell a number of premium beauty labels on their platforms and stores, will find it easier to tie up with players wanting to either enter or enhance their presence in the country, experts said.
Anand Ramanathan, partner, consumer products and retail sector leader, Deloitte India, said that he saw the domestic cosmetics sector getting a big boost with greater market access and harmonization of standards. “This also opens the doors for Ayurvedic and natural ingredient-based products both from India to the UK and vice-versa,” he said.
India imported $34.40 million worth of cosmetics, perfumes, essential oils and toiletries from the UK in 2024, according to the United Nations Comtrade database on international trade. Competition for premium beauty players that make and sell in India such as Hindustan Unilever, L’Oreal and Procter & Gamble is also expected to increase with the FTA, experts said.
Meanwhile, The International Spirits and Wines Association of India (ISWAI), which represents premium alcoholic beverage companies in India, said that imported spirits including bottled in origin and bulk bottled in India, which account for just 2.6% of the total market, will grow in size. The imported category is dominated by whisky with scotch being around 81%
of the overall imports of 10.9 million cases of alcoholic spirits, ISWAI said.
“The immediate tariff reduction will open up and expand market opportunities for the industry. The deal will significantly benefit Indian consumers, as premium international spirits will become more accessible, thereby accelerating the ongoing trend of premiumisation,” Sanjit Padhi, CEO, ISWAI, said.
Praveen Someshwar, MD & CEO of Diageo India, said that the FTA would “positively impact” accessibility of premium Scotch whisky in India. While Abhishek Khaitan, MD of Radico Khaitan, said that he saw significant cost advantages with the FTA.
“We have estimated our scotch requirements at over Rs 250 crore in FY26. This treaty represents a substantial opportunity for value creation,” he said.