Image Source: NDTV
The recently signed India-UK Free Trade Agreement (FTA) brings a significant change to the import duties on British premium spirits like whisky and gin, reducing tariffs from 150 percent to 75 percent immediately, with a further drop to 40 percent over the next decade. This move aims to enhance trade fairness and accessibility of international premium alcohol to Indian consumers while encouraging bilateral economic cooperation.
Key Highlights of the Spirit Sector Provisions
• The tariff cut applies both to bottled-in-origin and bulk imports of UK whisky and gin, enabling British brands to compete more effectively in India’s large alcohol market.
• Industry bodies such as the International Spirits and Wines Association of India (ISWAI) and leading firms like Diageo and Chivas Brothers have welcomed the agreement, anticipating growth opportunities, enhanced consumer choice, and stimulation of related sectors such as hospitality, tourism, and retail.
• The tariff reduction accelerates the ongoing premiumisation trend in India, where consumers increasingly prefer higher-end spirits.
Limited Impact on Consumer Prices
• Despite halving import duties, experts caution that retail price reductions for consumers are likely to be modest—an estimated Rs 100 to Rs 300 per bottle—because state-level taxes and distribution costs form a larger share of the final price.
• India’s state excise duties and levies remain a major cost component, limiting the overall price benefit.
• Industry analysts suggest measures such as minimum import price rules to prevent undercutting of domestic premium liquor brands.
Strategic Economic and Market Effects
• The deal enhances UK spirits exporters’ access to India, the world’s biggest whisky market by volume, potentially expanding exports and boosting UK distilleries and bottling facilities.
• Indian Made Foreign Liquor (IMFL) producers benefiting from bulk Scotch imports for blending anticipate strategic and cost advantages, aiding competitiveness.
• The pact aligns with broader trade liberalisation efforts under the FTA, setting a foundation for deeper economic ties and balanced growth across sectors.
This nuanced situation reveals that while accessibility to premium spirits will improve under the India-UK FTA, the end consumer will experience incremental rather than dramatic price relief, with benefits additionally spreading through allied industries.
Sources: Economic Times, India Briefing, Press Information Bureau (PIB)
Advertisement
Advertisement
