India-UK Trade Deal: Slashes Spirits Duties, But Savings Limited

The recently signed India-UK Free Trade Agreement (FTA) promises to make premium British spirits like Scotch whisky and gin more accessible in India by slashing import duties from 150% to 75% immediately, with a further reduction to 40% by 2035. While the move is hailed as a milestone for the alcoholic beverage sector, experts caution that consumer savings may be minimal, with price reductions potentially limited to Rs 100-300 per bottle.

The International Spirits and Wines Association of India (ISWAI) welcomed the FTA, with CEO Sanjit Padhi stating it fosters a balanced trade environment, boosting hospitality, tourism, and retail sectors. Diageo India’s MD Praveen Someshwar praised the agreement for enhancing access to premium Scotch, while Chivas Brothers’ CEO Jean-Etienne Gourgues called it a “game changer” for brands like Chivas Regal and Ballantine’s in India, the world’s largest whisky market by volume.

However, liquor industry expert Vinod Giri noted that state-level taxes, which form a significant portion of alcohol pricing, limit the impact of customs duty cuts. “The price reduction won’t significantly sway consumers, and companies may retain the savings,” Giri said. He also predicted a shift from bottled-in-India (BII) Scotch, like Black Dog and Vat 69, to direct imports, as lower duties reduce the need for local bottling.

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The Confederation of Indian Alcoholic Beverage Companies (CIABC) acknowledged benefits for domestic producers using imported Scotch for blending but raised concerns about potential “dumping” of bottled-in-origin (BIO) spirits. CIABC’s Anant S Iyer urged the government to impose a minimum import price to protect Indian premium brands. Despite the optimism, the FTA’s impact on consumer prices may fall short of expectations, balancing trade gains with domestic industry concerns.

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