Scotch whisky breakthrough in India during a troubled era

The Herald Scotland

08-05-2025

The UK-India free trade agreement announced on Tuesday may not ultimately add much to this country's overall gross domestic product, and it will certainly do little to offset the loss of frictionless trade with the European Union since Brexit. But it does promise significantly freer access for Scotch to a hugely lucrative market.
India is one of the world's largest consumers of spirits. But until now exports of Scotch to the rapidly growing economy have largely been impeded by hefty import tariffs. Under the new free trade deal between the UK and India, tariffs on imports of whisky and gin will be halved from 150% to 75%, before being reduced to 40% by the 10th year of the agreement.
The Scotch whisky industry, which exported £218 million of whisky to India last year, responded to the news with unbridled joy.
There was certainly no holding back from the Scotch Whisky Association, the reaction of which left the observer with the clear sense that the industry is within touching distance of a commercial holy grail.
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Mark Kent, chief executive of the SWA, hailed the agreement as a 'once in a generation deal and a landmark moment for Scotch whisky to the world's largest whisky market'. He said the reduction of the current 150% tariff on Scotch imports to India has the potential to increase exports to the country by £1 billion over the next five years, and help the industry create a further 1,200 jobs across the UK.
'The deal is good for India too, boosting federal and state revenue by over £3bn annually, and giving discerning consumers in a highly educated whisky market far greater choice from SME (small and medium-sized enterprise) Scotch whisky producers who will now have the opportunity to enter the market,' Mr Kent added.
'This agreement shows that the UK Government is making significant progress towards achieving its growth mission, and the negotiating teams on both sides deserve huge credit for their dedication. The Scotch whisky industry looks forward to working with the UK and Indian governments in the months ahead to implement the deal which would be a big boost to two major global economies during turbulent times.'
Mr Kent was not alone in responding effusively. William Wemyss, managing director of Wemyss Family Spirits, owner of Kingsbarns Distillery in Fife, said the deal with India would finally give it access to a market that was previously beyond its reach. He declared that the new agreement 'changes everything'.
Mr Wemyss, whose family also owns the Darnley's Gin and Wemyss Malts brands, said: 'It finally gives us a fairer footing to compete in a market that has been out of reach for too long.
'This deal could open the door to sustained investment, new partnerships, and long-term growth not just for our own business but for distilleries across Scotland. It's a positive and pragmatic step in the right direction, and one that we hope will be implemented swiftly and effectively.
'We welcome the agreement and remain committed to bringing our whisky to new audiences around the world, sharing a product that's proudly Scottish but globally loved.'
There is certainly no doubt the deal has come at a crucial time for the Scotch whisky industry. Over the last couple of years, distillers have seen sales come under pressure in key markets such as the US and China as a range of geopolitical and macroeconomic challenges have undermined demand. Figures published in February found the value of exports fell by 3.7% to £5.4bn in 2024, with the SWA citing difficulties presented in the domestic market by high excise duty and input costs.
It also highlighted 'shifting' patterns in world trade that mean exports to traditionally strong markets such as the EU and US 'have become much more challenging'. And this was before President Trump announced a barrage of tariffs on so-called 'Liberation Day' last month, which mean exports of Scotch whisky to the US – the industry's biggest market by value and worth £971m in 2024 – are now subject to an import tax of 10%.
You do not need to go too far to see the impact such geopolitical and macroeconomic events are having on the Scotch whisky industry. Last week, Isle of Harris Distillery, a shining light of the new wave of distilleries which have opened in Scotland over the last decade or so, announced 'deeply regrettable' plans for redundancies 'in a move to safeguard the future' of the business. It is not yet clear how many of the 45 jobs at the distillery will be affected, but it is undoubtedly a major blow for a venture that had made the provision of local employment on the island a key objective since it came into being. It was also unsurprising to read managing director Simon Erlanger and executive chairman Ron MacEachran highlight the challenges facing the wider Scotch whisky sector at present as they announced the decision.
'Much like our colleagues in the wider spirits industry, we are facing challenging headwinds which have led to some incredibly difficult decisions,' Mr Erlanger told The Herald.
'Following a number of cost-cutting measures, voluntary redundancy is being offered to staff in the first instance, with compulsory to follow thereafter if we do not fulfil our cost reduction target. It is deeply regrettable we find ourselves in this situation and would like to take the opportunity to thank our entire team, particularly those affected by the changes, for their dedication and contribution to the business.'
Mr MacEachran said: 'What we have seen across the industry in recent months are significant reductions in A and P (advertising and promotion) expenditure, headcount reductions, some of them very significant, slowing down or mothballing of distilleries.'
It is to be hoped that the redundancies announced by Isle of Harris are not followed by yet more cuts at other distilleries as the industry continues to encounter difficult conditions. The breakthrough in India will certainly help the sector in the long run, but it would perhaps be naïve to think that every Scotch whisky distiller will benefit, with the bigger players tending to find it easier to succeed in exports market than their smaller counterparts.
Moreover, even by year 10 of the new free trade deal, Scotch whisky exporters will still face tariffs of 40% in India.
However, the new accord with India is certainly a step in the right direction in a highly uncertain world.