Indian whisky lovers may find their favourite premium international brands slightly more affordable following the historic India-UK Free Trade Agreement (FTA), but experts believe the price reductions will remain modest despite significant cuts in import duties. The landmark trade deal, signed during Prime Minister Narendra Modi’s visit to Britain, reduces tariffs on UK whisky and gin from 150% to 75% immediately and down to 40% by the tenth year of the agreement.
The India-UK FTA, finalised after over three years of negotiations, aims to enhance bilateral trade by $35 billion over time and provide the UK with a competitive edge in the growing Indian spirits market. Commerce Minister Piyush Goyal and his UK counterpart Jonathan Reynolds signed the pact in London, which is expected to open opportunities for both economies across multiple sectors, including hospitality, tourism, and retail, driven by premiumisation in India’s alcohol sector.
Details of Tariff Reductions Under the FTA
According to the agreement, the immediate reduction of tariffs from 150% to 75% will offer UK whisky producers a significant advantage, enabling them to expand their market reach in India. An official statement from the UK government noted that further reductions to 40% over the next ten years would position the UK ahead of global competitors in India’s lucrative alcoholic beverage market.
The International Spirits and Wines Association of India (ISWAI), which represents premium alcoholic beverage companies, welcomed the deal, describing it as a historic moment for the sector. ISWAI CEO Sanjit Padhi stated that the agreement would make premium international spirits more accessible to Indian consumers, fuelling the ongoing trend of premiumisation while creating growth in ancillary sectors and increasing state revenues through alcohol sales.
Experts Caution on Modest Consumer Impact
Despite the substantial cut in import duties, industry experts caution that consumers should not expect dramatic reductions in retail prices. Liquor industry expert Vinod Giri highlighted that a significant portion of alcohol taxation in India is managed at the state level, which limits the impact of reduced customs duties on end-consumer prices.
Giri explained that even if the full customs duty reduction is passed on to consumers, the decrease in the price of imported Scotch whisky would likely be modest, with reductions estimated between ₹100 and ₹300 per bottle. This, he noted, reflects the broader taxation landscape on alcohol in India, which continues to be heavily influenced by state-level levies, restricting the extent of price benefits that can be transferred to consumers.
While the FTA marks a significant step towards trade liberalisation between India and the UK and may gradually shift consumer trends toward premium imported spirits, the structural tax regime on alcohol in India will remain a decisive factor in shaping the real benefits for the end consumer in the coming years.
