India-UK FTA makes Scotch cheaper. India and its love affair with whisky

Hic, hic, hooray!

On Thursday (July 24), India and the United Kingdom finally signed the much-awaited Free Trade Agreement (FTA) after three years of intense negotiations and deliberations. As PMs — Narendra Modi and Keir Starmer — signed on the dotted line, the UK government announced that the new trade pact will likely boost annual bilateral trade between India and the UK by £25.5 billion.

The India-UK FTA will see a reduction in tariffs on several British products, including items such as chocolates, Scotch whisky, luxury cars, cosmetics, chocolates, biscuits, lamb, salmon, soft drinks, and medical devices.

But how much cheaper will Scotch whisky and gin become as a result of the trade deal? We examine the impact of it.

Reduced tariffs on Scotch whisky and gin

The newly-signed India-UK FTA reduces the import duties on Scotch whisky and gin. Under the FTA, the Total Customs Duty on imported alcoholic spirits, limited to whisky and gin from the UK, will be halved at the first stage to 75 per cent from 150 per cent, followed by a progressive reduction to 40 per cent over the next decade.

This new tariff structure will apply to both Bottled-in-Origin (BIO) and bulk imports used for making Bottled in India (BII) products, as well as blending with Indian Made Foreign Liquor (IMFL).

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Shortly after the signing of the FTA, the International Spirits and Wines Association of India (ISWAI), the apex body representing premium alcoholic beverage companies in India, welcomed the move, calling it a historic moment. The ISWAI said that for the alcobev sector, this agreement paves the way for a more balanced and equitable trade environment, particularly given that Indian alcohol exports to the UK have zero import duties.

“The deal will significantly benefit Indian consumers, as premium international spirits will become more accessible, thereby accelerating the ongoing trend of premiumisation. It will also stimulate growth across ancillary sectors such as hospitality, tourism, and retail, while potentially increasing revenue for Indian states,” said Sanjit Padhi, CEO, ISWAI.

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Other industry executives also welcomed the move. Diageo India MD and CEO Praveen Someshwar said, “We laud the Indian and British governments for formalising this historic treaty, which will boost bilateral trade and positively impact the accessibility of premium Scotch whisky in India, reigniting growth and increased choice for Indian consumers.”

Chivas Brothers Chairman and CEO Jean-Etienne Gourgues also termed the India-UK FTA as “a sign of hope in challenging times for the spirits industry”.

Even Onkar Sharma, a partner at Khaitan & Co agreed with this, telling Moneycontrol, “This tariff reduction is expected to make premium UK brands more affordable in India, boosting their market share and benefiting companies like Diageo and Chivas Brothers while enhancing consumer choice and potentially increasing state revenues through premiumisation.”

Raising a toast to lowered prices

As a result of the FTA and reduced tariffs, the price of Scotch whisky brands in India is expected to fall — depending on the Indian states’ excise and pricing policies. Most news reports state that in the premium segment, the cost of brands such as Johnnie Walker Black Label and Chivas Regal will fall by Rs 200-300 per bottle.

Currently, the price of a Johnnie Walker Black Label (750 ml) costs around Rs 3,100 in Delhi and Rs 4,200 in Mumbai.

In the standard segment, brands like Red Label and Ballantine’s may cost less by Rs 100-150.

Industry experts noted that the biggest winner from the India-UK FTA won’t be the end consumer, but the companies. Liquor industry expert Vinod Giri explained to PTI, “Consumer prices for imported Scotch (whiskey) are not likely to change much. “Most of the taxes on alcohol sit in states, and even if all customs duty reduction is passed on, the impact on consumer prices of imported Scotch whiskies will be in the range of Rs 100-300 per bottle.”

He further highlighted, “Stripped off all the noise, all the UK-India FTA will do for the whisky industry is help the bottom lines of companies. Consumers should not expect many changes. FTA will neither dramatically change the Indian whisky market nor open new vistas for Indian producers.”

India’s Scotch whisky consumption

India has long been a consumer of alcohol with whisky consumption exploding by more than 200 per cent in the past decade. Last year, India was ranked as the world’s number one Scotch whisky market by volume, according to the Scotch Whisky Association data. It regained its position after replacing France, with 192 million bottles exported in 2024, the association said.

Other experts also note that whisky is among India’s favourite spirits — it accounted for over 60 per cent of India’s alcohol consumption last year, according to a report by The Times of India and The Hindu Business Line.

In fact, a Moneycontrol report stated that within the first six months of 2024, India’s whisky exports had increased 26 per cent to $78.5 million. Out of this, blended whisky, which accounts for half of the total exports, jumped 37 per cent, and premium whisky exports almost doubled to $6.3 million.

Moreover, the whisky market in India that was estimated to be worth $21.13 billion in 2023 is expected to grow at a compound annual growth rate (CAGR) of 4.61 per cent between 2024 and 2030, reaching a value of $28.97 billion by 2030.

However, it’s interesting to note that India’s introduction to whisky wasn’t all that smooth. As the British colonised India, it brought in its favourite, the whisky. But they came up against an obstacle in the form of Indians, who argued that they had their own local drinks.

Owing to this, the British Raj established a commission to study scotch whisky in an attempt to prove to India that it was worth drinking. On completion of their studies, found out that scotch was harmless of outstanding quality, making it a perfect drink for social occasions. Scotch whisky entered India then, and has become a sign of taste and culture ever since. It became the drink that Indians brought in for social gatherings or used to toast during a particularly special celebration.

At first, it was associated with the British and the Indian elite and the royalty. However, as time passed, whisky became more accessible to Indians, and as they say, the rest is history.

With inputs from agencies