Consumers of scotch whisky and gin may find their favourite brands becoming cheaper, thanks to the India-UK free trade agreement (FTA) which will lead to import duty on them being halved to 75% from 150%. The levy will subsequently be cut to 40% in a decade, according to the contours of the deal.
While the tariff cut is expected to benefit both consumers and premium alcohol firms such as United Spirits and Allied Blenders and Distillers (ABD), domestic alcohol companies such as Radico Khaitan fear the move could impact their business. Shares of several Indian liquor manufacturers, including Som Distilleries, Radico Khaitan and Piccadily Agro Industries, fell up to 5% on Wednesday, a day after the India-UK FTA was announced.
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.
“We have been asking for a level-playing field for Indian players,” Anant S Iyer, director general of CIABC, said. “We only hope that the government has included in the FTA a minimum import price which will prevent dumping, under invoicing and removal of non-tariff barriers to ensure better international access to Indian players,” Iyer said.
Industry officials said CIABC had recommended an import duty cut to 100% on scotch whisky and gin in the first year and a gradual reduction to 50% over 10 years. That has not been considered, they say, adding that cheaper bottles of scotch whisky and gin will increase competitive intensity in the domestic market. According to the Scotch Whisky Association (SWA), India is the largest export market by volume for scotch whisky, with more than 192 million bottles exported to the country in 2024, a year-on-year growth of 14.6%. By value, India ranks fifth in size, it says.
Firms such as United Spirits, a subsidiary of British major Diageo, are among key gainers of the UK-India trade deal, experts said, since imported scotch whisky contributed to 32% of its net sales in FY24. “This treaty will enable improved accessibility and choice of scotch for Indian consumers,” Praveen Someshwar, MD & CEO, Diageo India, said.
Karan Taurani, senior vice president, research, at brokerage Elara Capital, believes the FTA could mark a shift within India’s premium alcohol market, where scotch whisky and other imported spirits are priced out of reach for most consumers. A bottle of scotch whisky which retails for Rs 5,000 could come down to Rs 3,500 after the duty reduction. The reduced retail price includes state taxes and distributor margins. Prices may dip further as tariff rates fall, experts said.