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Business Standard
25-07-2025
- Business
- Business Standard
India-UK trade pact: Tariff cut may not impact Scotch whisky retail prices
The India-UK free trade agreement (FTA), under which tariffs on whisky and gin have been halved from 150 per cent to 75 per cent, which will further fall to 40 per cent in a decade's time, will not necessarily impact prices of Scotch whisky and gin for Indian consumers. According to a May 2025 report from the International Wine & Spirit Research (IWSR), blended Scotch grew the strongest of all the large whisky categories in India in 2024, with volumes rising by medium single digits and sales more than doubling since 2020. India is known to be a whisky market, with widespread national sales. However, while the data company's forecasts anticipated an upside from the FTA, it added that its impact should not be overestimated. 'While tariffs have been slashed from 150 per cent to 75 per cent, the impact on shelf prices is closer to 10 per cent and it is not a given that this will be passed on to consumers,' it had stated in the 2025 executive summary. The revised tariffs will apply to both bottled-in-origin (BIO) and bulk imports. Industry executives agree, stating that tariffs make up only up to 15 per cent of the final retail price, and with state taxes and costs for distribution and marketing, prices could be down by a mere 10 per cent. This may not be passed on to consumers, they said on the condition of anonymity. A senior commerce ministry official said that a major portion of whisky imports into India are used in the manufacture of blended whisky, whose production is set to rise due to cheaper raw material. 'We are foreseeing significant strategic and cost advantages from this development. We have estimated our Scotch requirements at over ₹250 crore in 2025-26 (FY26), and this treaty represents a substantial opportunity for value creation,' said Abhishek Khaitan, managing director at Radico Khaitan, one of the largest importers of Scotch whisky. Some liquor players also believe that the FTA will help consumers have access to premium Scotch whisky at reduced prices. 'The UK FTA is a positive move for the Scotch whisky segment, and it will enhance accessibility and affordability for Indian consumers. For import-driven portfolios like ours, this could fast-track category adoption, bring price parity closer to Indian Made Foreign Liquor (IMFL), and enable deeper reinvestment into consumer-building efforts,' said Debashish Shyam, cofounder and director, Ardent Alcobev, which sells Dram Bell blended Scotch whisky. However, the real benefit, Shyam added, will depend on how quickly the duty reductions are implemented, and whether the states align their tax structures accordingly. Spirits made up 51.2 per cent of the total beverage alcohol market in 2024, dominated by whisky. According to the data company, India consumed 258,750 under-9-litre cases of whisky in 2024, which is set to witness a compound annual growth rate (CAGR) of 3.1 per cent from 2024 to 2029. These included 8,509.60 cases of Scotch whisky, the company stated, adding that India is set to become the biggest Scotch market in the world by 2027.
Mint
25-07-2025
- Business
- Mint
FTA to bring modest dip, not a steep dive, prices of UK spirits
NEW DELHI : Indian consumers hoping for the prices of their favourite UK whiskies to drop dramatically after the free-trade agreement need to temper their expectations. The India-UK Comprehensive Economic and Trade Agreement (CETA), officially signed this week, will reduce the current 150% customs duty on spirits by half to 75% once the agreement comes into force, with a further reduction to 30-40% over the next 10 years. This applies to both 'bottled-in-origin' (BIO) spirits and bulk imports used by Indian manufacturers for blending with Indian made foreign liquor (IMFL). The UK wines and beers are exempt from the deal. Industry analysts and company executives suggest the immediate impact on retail prices will likely be modest, with reductions estimated between single digits and 10-15%, largely because import duties currently make up only 10-15% of the total shelf price. Margins still key to retail price 'While this (reduction in duty) is a notable move, its impact on retail prices will be modest in the near term," said Naveen Malpani, partner and consumer & retail industry leader at Grant Thornton Bharat. 'Import duties contribute only a fraction of the final price, with state excise, logistics, and distributor margins forming a large share of consumer cost." Grant Thornton Bharat estimates retail price drops in the range of ₹100–300 per bottle (8–10%) for premium Scotch. Also Read: India-UK FTA uncorks new promise for imported scotch and gin Ardent Alcobev Pvt Ltd, which sells Dram Bell—a blended Scotch whisky, bottled in origin—said the move is 'positive" and will enhance accessibility and affordability for Indian consumers. "The real benefit will depend on how quickly the duty reductions are implemented and whether the states align their tax structures accordingly," said Debashish Shyam, co-founder and director. 'While the final impact on retail pricing will vary by state due to local excise structures and channel margins, this duty reduction has the potential to bring down consumer prices by 10–15% over time." In a state like Maharashtra, for instance, where Dram Bell is already priced competitively—only marginally above premium IMFL—this development could further narrow the price gap and enhance accessibility. New markets for smaller players The move is also helping smaller players get into the market. 'This move will dramatically reduce cost for us and shake up the market, making entry and access easier," said Nishant Sharma, founder of Rutland, a UK-based spirits company that sells gin and rum bottled in Scotland. Once in full effect, a bottle of the brand's gin could cost ₹4,000 from ₹6,000. 'Launching a product like ours into the Indian market is a huge cost, because of the 150% duty. This gives us a small crack to enter the market," he said. Also Read: ITC bets on new growth engines, expands food-tech and wellness play The company sells its brand via airports with plans to expand in the top cities by later this year. Scotch dominates imports India, one of the world's largest alcohol markets, sells over 400 million cases of Indian alcoholic spirits annually. Yet imported spirits–bottled in origin and bulk bottled in India–account for 2.6 % of the total market. The imported category is dominated by whisky, with Scotch being around 81% of the overall imports of 9.9 million cases of alcoholic spirits, according to estimates by International Spirits and Wines Association of India or ISWAI. To be sure, 79 % of the Scotch imported into the country is in bulk form, which is used for bottling in India and for blending by local brands of whisky in the IMFL category. William Grant & Sons, Allied Blenders & Distillers and Bacardi declined to offer comments on the development. "Customs duty as part of the total MRP is hardly 20%, and if that even comes down by half, the MRP won't change dramatically. It won't immediately and dramatically change prices for everyone," said an industry executive speaking to Mint on the condition of anonymity. Also Read: Nestlé India Q1 profit falls on higher input, finance costs The person quoted above expects a single-digit percentage drop in prices. Pricing is also dynamic and dependent on how the pound fares next year, freight costs, etc. Meanwhile, the change could take a few months. Impact on Indian makers The FTA needs to be ratified by both parliaments, then notified in custom schedules, earliest by January 2026, said a spokesperson for spirits company Radio Khaitan. However, for Indian liquor makers, the duty reduction on bulk Scotch imports provides some advantage. "We export a lot of IMFL into the Middle East, Africa—for them, there are a lot of big benefits. The move will improve the quality of our IMFL exports," the person quoted earlier told Mint.
