India-UK Trade: India has decided not to offer any import duty concessions on British wines under its recently concluded free trade agreement (FTA) with the United Kingdom, announced on May 6.
According to an official familiar with the negotiations, wines are on the exclusion list along with other sensitive agricultural products such as dairy, cheese, apples, oats, and vegetable oils. British beer, while not excluded entirely, will receive only limited duty concessions under the trade pact.
Why was this decision made?
The decision to keep British wines out of the FTA’s benefit basket holds strategic importance. The European Union, a dominant player in the global wine market, is currently in advanced stages of trade negotiations with India. Granting duty reductions to the UK could have opened the door for the EU to demand similar concessions on its wines. By maintaining high duties on wine imports, India is avoiding setting a precedent that could complicate future trade deals.
What does the FTA offer?
The FTA between India and the UK includes tariff reductions on key British exports such as Scotch whiskey and cars. Under the deal, India will gradually reduce the import duty on UK whiskey and gin from the current 150% to 75%, and eventually to 40% by the tenth year. However, the government has clarified that the phased implementation will help shield domestic whiskey manufacturers from abrupt competition.
India’s growing domestic wine and beer market
India’s domestic wine and beer markets are witnessing robust growth, fueled by rising incomes, urbanisation, and evolving consumer preferences. The Indian wine market, currently valued at over USD 200 million, is projected to reach USD 700 million by 2030. Meanwhile, the beer market, estimated at USD 6 billion, is expected to more than double to USD 15 billion by 2034.
India’s wine imports
Despite its growing consumption, India’s wine imports remain modest. In 2023-24, imports stood at around USD 25 million, with only about USD 1 million worth coming from the UK. Major wine suppliers to India include Australia, Singapore, France, Italy, and Spain. India has already offered duty concessions on premium wines to Australia under a separate FTA that came into force in December 2022.
Although the India-UK FTA talks have concluded, the agreement is not expected to be implemented immediately. Legal vetting, or “scrubbing,” is underway, and the text will likely be made public by August or September. Following that, the UK Parliament will need to ratify the agreement, a process that could take up to a year, meaning the FTA may come into effect only by late 2025.
(With PTI inputs)