Scotch whiskey to get cheaper in India as import duty slashed under UK FTA

India-UK trade pact to halve Scotch whisky import duty to 75 per cent initially, then 40 per cent over 10 years; move expected to cut prices, boost exports, FDI, and premium brand access

Scotch whisky fans in India may soon find their favourite drinks becoming cheaper. Under a new India–UK Free Trade Agreement (FTA), the current 150 per cent import duty on Scotch whisky will be cut to 75 per cent initially and then gradually reduced to 40 per cent over the next 10 years.

 

The tariff cut is expected to benefit both consumers and the Scotch industry. A bottle of Scotch whisky that currently retails for around ₹5,000 may soon cost between ₹3,500 and ₹4,000 after the initial reduction, depending on state taxes and distributor margins. As the tariff continues to fall, prices are expected to dip further.

 

'Transformational' for UK exports

 

Mark Kent, chief executive of the Scotch Whisky Association, described the agreement as a “once in a generation deal”.

 

“The reduction of the current 150 per cent tariff on Scotch whisky will be transformational for the industry and has the potential to increase Scotch whisky exports to India by £1 billion over the next five years, creating 1,200 jobs across the UK,” he said in a statement.   

 

  “The reduction of the current 150% tariff on Scotch Whisky will be transformational for the industry. The deal has the potential to increase Scotch Whisky exports to India by £1bn over the next 5 years and create 1200 jobs across the UK," Kent added.

 

India has already overtaken France to become the largest market for Scotch whisky exports by volume, with 192 million bottles exported in 2024, up from 167 million in 2023.

 

The agreement also promises to open the Indian market to a broader range of Scotch brands, including boutique distilleries previously unable to compete due to high tariffs. This could bring more variety and competitive pricing to the premium segment of the market.

 

Domestic market shielded by gradual rollout

 

Despite the tariff cuts, Indian officials maintain that the domestic alcoholic beverage market — dominated by country-made liquor (88 per cent) and India-made foreign liquor (9.5 per cent) — will not face significant disruption. Scotch currently accounts for just 2.5 per cent of India’s whisky market.

 

“The incremental increase in imports of Scotch whisky, therefore, would not significantly affect the domestic market. The tariff reduction on imports is over a longer period of time (10 years) and even after that it will attract significant customs duty (40 per cent),” news agency PTI quoted a government official as saying.

 

Boost to FDI and local industry

 

The official also noted that easing import duties could help attract foreign direct investment (FDI) into the Indian liquor industry. “Liberalisation of duties would invite UK's expertise in terms of spirit/wine making, quality control, marketing and consumer awareness,” the official said.   

 

  Moreover, improved FDI prospects and access to advanced technologies could benefit Indian producers of foreign liquor, while potentially increasing government revenue, curbing counterfeits, and enhancing export quality.

 

Industry voices concern over future FTAs

 

Anant S Iyer, Director General of the Confederation of Indian Alcoholic Beverage Companies (CIABC), expressed concern that similar concessions in future FTAs with the EU, US, or Australia could harm the Indian alcobev and wine sectors.

 

“We fear that if the same template of duty reduction is followed for the trade deals with the EU, the US and other nations which produce spirits and wines, then the Indian Alcobev industry, including the wine sector, could get adversely impacted,” he said, reported PTI.   

 

  Iyer also urged the government to review state-level excise concessions on imported liquor and stressed the need for better market access to boost India’s alcoholic beverage exports to $1 billion by 2030.

 

(With agency inputs)