30-07-2025
Big scotch tariff cut to bring little cheer for Indians after UK trade deal
Cutting Scotch whisky import tariffs to 75% under the India-UK trade deal may offer limited benefit to Indian consumers due to India's complex tax regime. State levies, excise duties, and fees still keep prices high, reducing the impact of tariff cuts to under 10%. Despite growing demand and Scotch being India's top import by volume, local single malts are gaining ground.
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At first glance, halving import tariffs on Scotch to 75% under the India-UK trade deal should bring the biggest cheer to India's whisky lovers. But there is little to celebrate once you look closely at India's complex tax the world's most populous nation, each of the 28 states and eight federally-controlled territories regulate alcohol independently and impose heavy local taxes that contribute richly to the means the price consumers pay for their drink in India includes state excise tax, handling charges, a social welfare fee, and distribution and retailer margins, and once they are taken into account the industry estimates final prices of imported Scotch will come down by less than 10%, four liquor industry executives said. Some fear states may even increase taxes, cancelling out the reduction from the trade executive at a foreign company said the tariff cut "won't be a gamechanger." Another said the share of customs duty as a percentage of the total product price was less than 25% in most states. Both declined to be named as they were not authorised to speak to the Malpani, consumer and retail industry leader at consultants Grant Thornton Bharat, said the import duty made up only about 10% to 20% of the retail price on average across India, with the rest from local levies and other costs."The deal is likely to enhance premiumisation and brand variety rather than trigger an immediate spike in demand," he said.A breakdown provided on the website of the government of southern Kerala state shows the high taxation regime: a bottle of Pernod's Chivas Regal blended Scotch aged for 18 years costs 6,288 rupees ($72) with import tariffs, but local taxes and levies take the price to 13,560 rupees ($156).Similarly, Johnnie Walker Blue Label costs 30,570 rupees ($352) in Kerala. In California, after discounts, that brand costs around $180, according to shopping website the high taxes, Euromonitor estimates India's spirits market was worth $37 billion last year, lagging only China and the United States, and it remains an attractive market - Diageo, which produces Johnnie Walker, and Pernod Ricard together had India revenues of almost $6 billion last is Scotch whisky 's largest export market by volume, with the equivalent of more than 192 million bottles exported to the country in 2024, and the volume growing by more than 200% in the past decade, according to the Scotch Whisky doing business in the whisky-loving country is challenging. As well as the layers of taxation, companies must contend with a web of regulation, which requires they seek approval for bottle labels and prices each year. In 2022, Pernod's then South Asia CEO told Reuters in an interview that India was "probably the most complex market" in the world for the the complexity, local producers have also stepped up. Made-in-India single malts are offering stiff competition to the established international brands as Indians develop a taste for bespoke cocktails and more sophisticated Indians "are all going for Indian single malts rather than Scotch," said Rajesh Chopra, director general of Indian Malt Whisky Association, adding lower tariffs could spur collaboration among Indian and UK whisky makers.
