India-UK FTA promises firmer pour for scotch and gin

Mint

24-07-2025

NEW DELHI
:
A landmark free trade agreement (FTA) signed between India and the UK is set to shake up the Indian alco-bev market, slashing steep import duties on whisky and gin and opening the doors wider for premium foreign spirits. Industry leaders say the move could accelerate premiumization, benefit both global and Indian liquor companies, and reshape consumer choices in the world's largest whisky market.
Once the agreement comes into force, customs duty on imported whisky and gin from the UK will be halved from 150% to 75% immediately and then gradually reduced to 40% over the next decade. The revised duties will apply to both bottled-in-origin (BIO) and bulk imports.
BIO spirits are entirely produced and bottled outside India before import, such as whisky made and packaged in the UK. Bulk imports, on the other hand, are used for making bottled-in-India (BII) products and for blending with Indian Made Foreign Liquor (IMFL).
Anand Ramanathan, partner, consumer products and retail sector leader, Deloitte India, said that the tariff reduction will benefit UK-based Scotch brands the most. 'Given India's evolved whisky-drinking market, this will encourage both established players and new entrants to expand their global portfolio offerings here," he said.
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Sanjit Padhi, CEO of the International Spirits and Wines Association of India (ISWAI), welcomed the development and said the FTA could become a trendsetter.
'For the alco-bev sector, the immediate tariff reduction on Scotch whisky and gin imports from 150% to 75%, and subsequent reduction to 40% over the decade, will open up and expand market opportunities for the industry," Padhi said, adding that the deal would benefit Indian consumers and accelerate the trend of premiumization.
Why this matters for India
India is one of the world's largest alco-bev markets, selling over 400 million cases of Indian alcoholic spirits annually, according to estimates from ISWAI. However, imported spirits—both BIO and BII—account for just 2.6% of that market. The imported category is dominated by whisky, with Scotch whisky accounting for approximately 81% of the overall 10.9 million cases of alcoholic spirits imported.
According to Padhi, the duty reduction will also significantly benefit manufacturers in the IMFL industry, as 79% of the Scotch imported into the country comes in bulk form.
Radico Khaitan Ltd, an importer of Scotch whisky in bulk for its own brands, anticipates significant cost advantages from the deal. 'We have estimated our scotch requirements valued at over ₹250 crore in FY26, and this treaty represents a substantial opportunity for value creation," said Abhishek Khaitan, the company's managing director.
Khaitan added that the reduction in import duties will enhance consumer access to premium international spirits and also 'enable Indian companies to strengthen cross-border collaborations and accelerate premiumization in the domestic market".
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Radico Khaitan sells brands such as Jaisalmer gin, Magic Moments vodka, 8 PM Whisky, and Rampur Indian Single Malt Whisky.
Potential for mutual growth
ISWAI's Padhi said that as Indian single malts gain global recognition, improved market access can create mutual benefits, allowing Indian whiskies to expand their footprint abroad just as Scotch whiskies gain better accessibility in India.
India is the world's largest spirits and whisky market, with 20 million people added annually above the legal drinking age. According to International Wine and Spirits Research (IWSR), India's alcohol market grew 9% by value in 2024, reaching just under $40 billion. The domestic alcohol market is expected to top $50 billion by 2031.
Praveen Someshwar, managing director & CEO of Diageo India (United Spirits Ltd), the local arm of British spirits major Diageo Plc, lauded both governments, saying that it 'will boost bilateral trade and positively impact the accessibility of premium Scotch whisky in India, reigniting growth and increased choice for Indian consumers".
Diageo India sells brands such as Johnnie Walker, Ketel One, Tanqueray, Captain Morgan, and McDowell's No1, with a portion of its portfolio made locally and another part imported.
Contrarian voice
Meanwhile, the Confederation of Indian Alcoholic Beverage Companies (CIABC) raised concerns that lower import duties on Scotch and other BIO spirits could lead to dumping of cheap foreign alcohol in India, hurting the growth of premium Indian brands.
It has urged the government to monitor imports using technology, flag underpriced shipments, and impose a minimum import price to prevent unfair competition. CIABC also called on state governments to end concessions for imported brands, such as lower registration fees and excise duties, which make foreign products cheaper than Indian ones.
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'The lack of reciprocal market access for Indian spirits in the UK and EU, saying non-tariff barriers continue to block Indian exports and could hamper the government's $1 billion export target for the Alcobev industry by 2030," said Anant S. Iyer, Director General, Confederation of Indian Alcoholic Beverage Companies (CIABC), in a statement.
The deal
Overall, the FTA is anticipated to significantly boost bilateral trade between India and the UK by an estimated $34 billion annually, and the two countries aim to take that to $120 billion by 2030.
The agreement will see tariffs eliminated on nearly 99% of Indian exports to the UK, including textiles, pharmaceuticals, and gems and jewellery, while India will significantly reduce duties on products like whisky, electric vehicles, and cosmetics.