Scotch and gin may not get significantly cheaper for consumers in India despite tariff cuts: Industry

Mint

07-05-2025

Indian consumers eyeing cheaper Scotch whisky and gin after the India-UK trade pact should steel themselves for a disappointment. While the tariff on British whisky and gin was halved from an eye-watering 150% to 75% after three years of painstaking negotiations, this is not likely to reflect in prices, experts told
Mint.
This is because of several factors, including the multiplicity of local tariffs and liquor companies being unwilling to pass on the benefits of lower tariffs to consumers, citing narrowing profit margins.
Liquor is imported in three different categories.
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First is the high-end bottled-in-origin (BIO) category—where products are made and packaged in the UK, Scotch whisky for instance. Here, brands will benefit from lower costs and improved margins because of the tariff cut. But Indian states set liquor prices annually, based on their own excise duty or local taxes, and changing them is a time-consuming approval process.
So, in the past, even where duties have been lowered, as in Maharashtra, prices have mostly stayed the same. Any benefit passed on to the consumer is expected to be modest. Many states have either not allowed price increases to domestic manufacturers in several years or have done so minimally. With increasing cost pressures, many companies have been squeezed tight on their margins for the last five-seven years as a result.
In November 2021, for instance, Maharashtra reduced its excise duty on imported liquor from 300% to 150%, aiming to lower prices. But prices fell by only 30–50% and that too for a limited number of brands, so consumers didn't fully benefit from the government's move.
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The second category involves bulk Scotch imports, which are brought in by Indian companies and used in blending to make locally branded premium whiskies, the so-called Indian Made Foreign Liquor. The reduction in duty will lower costs for companies like Diageo, Radico and ABD, but they are unlikely to pass on these savings to consumers, industry figures said. These firms have been operating under margin pressure, they said, and are more likely to use the cost relief to protect their profits.
The third segment is bottled-in-India (BII) brands such as 100 Pipers and Teacher's, where Scotch is imported in bulk and bottled locally. These products dominate the
₹
1,000–2,000 price segment and face little pricing pressure from global competitors in any case and see no need to reduce their prices if more international brands come in.
The only benefit to the Indian consumer will come in the form of a greater choice of British liquor brands.
As per the latest available data, India consumed around nine million cases (of nine litres each) of Scotch whisky in 2024, either imported in bottles or imported in bulk and bottled in India. Indians consumed over two million cases of gin, of which imports accounted for around 250,000 cases.
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'Overall, at the consumer level there may not be much change. The supplier companies will more likely take the savings from customs duty reductions in their margins by increasing billing price. In Maharashtra where excise duty was reduced on imported products from 300% to 150% a few years ago, companies chose to increase their billing prices thus not really transferring reduction to consumers. It happens because import price in India historically has been very low to offset for high import duties." said Vinod Giri, director general of the Brewers Association of India.
'Even if companies do pass on any benefit, the reduction in consumer price will not be more than 10-12%. The gap between price segments is far too wide to have any impact from that level of reduction. " Giri formerly held the same position at the Confederation of Indian Alcoholic Beverage Companies (CIABC) and was closely monitoring this pact over the last few years.
According to the FTA, the tariff on Scotch will be cut from 150% to 75% immediately, and to 40% over ten years.
'While this is a welcome move, this may have a short-term impact on Indian products. However, we are confident about the quality of our products. We also hope that this deal will allow better ease of business for Indian products in the UK. It is also crucial to ensure that both nations maintain a level playing field, safeguarding the interests of domestic industries and promoting fair competition," said Paul P. John, chairperson of John Distilleries Ltd.
"The cost of the bottled in origin brands should come down. There will also be a reduction in bulk spirit import prices and those bottled in India products with a significant scotch content will benefit. Consumers may not see much price difference as companies may not pass on the price changes," said Paramjit Singh Gill, chief executive officer (CEO), consumer division, Globus Spirits Ltd said. Globus makes Terai gin and Doaab single malt among other spirits.
Domestic companies are confident that their higher end products should not feel any heat from international spirits as the consumer is now mature and understands their product and quality. Fullarton Distilleries—makers of Pumori gin—which recently got acquired by Allied Blenders and Distillers is not expecting much change in sales either.
Many Indian companies, over the last two years, have turned their focus towards making their portfolios more premium in order to meet a more niche consumer demand. Earlier this week,
Radico Khaitan
, for instance, said 30% of its FY26 growth will now come from luxury spirits.