In a historic move of 2025, India and the United Kingdom (UK) have signed a multi-billion-pound free trade agreement (FTA). While the FTA promises to be mutually beneficial for both the UK and India, the Indian alcobev industry has expressed its discontent with the FTA terms. Here’s all the information you need to know about the new India-UK FTA and how it might affect the Indian alcobev industry.
India-United Kingdom FTA Terms: Key Highlights And Concerns
Under the new FTA terms, the tariffs on UK-made whisky and gin will be slashed from 150% to 75% initially, eventually dropping to 40% over ten years. The new India-United Kingdom FTA Terms concern the Indian alcobev industry in the sense that reduced import duties on foreign liquor could hurt domestic producers.
It is estimated that this phased reduction will significantly benefit British liquor brands. As they already have a strong foothold in the Indian premium spirits market, the Indian alcobev industry has expressed concerns about how it will affect domestic producers.
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Confederation of Indian Alcoholic Beverage Companies On Slashed Import Duties
While Indian industries and exporters have largely welcomed the new India-United Kingdom FTA terms, alcohol manufacturers remain unhappy and discontent with this decision.
“We have always been asking for a level playing field for the Indian players. We only hope that the government has included in the FTA the MIP (minimum import price) which will prevent dumping / under invoicing and also the removal of non tariff barriers to ensure better international market access to Indian alcoholic beverages,” Director General of Confederation of Indian Alcoholic Beverage Companies (CIABC) Anant Iyer stated.
He also stated that they had asked for a 100% reduction in the first year, and then gradually to 50% over the next 10 years. However, the Indian Government did not completely comply with the pleas of the CIABC.
After the public announcement of the FTA, Iyer also expressed his concern about the absence of a minimum import price. He warned that this could lead to an influx of cheaper scotch imports. Iyer pointed out that the UK’s scotch industry had previously experienced a decline due to the tariffs levied by the United States and that cheaper brands could easily assert dominance in the Indian market.
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Impact Of Slashed Import Duties On The Indian Alcohol Industry
The reduced import duties and other agreements of the FTA can significantly hinder the growth of the Indian alcobev industry that is gaining momentum in recent years. Without a minimum import price, cheaper Scotch brands will find it easier to enter the Indian market.
Not just that, but the CIABC has expressed concerns about non-tariff barriers, urging the UK to remove restrictive definitions on whisky so as to allow Indian whisky to access the UK market. The body has requested for Indian whisky to be recognized as it is, and not just ‘whisky’. If Indian whisky isn’t addressed as per its rightful name, it is a win not for India but the UK.
Iyer also stated that the lack of a minimum import price and the 75% and 40% tariffs will likely have a negative impact on India’s growing wine sector as well.
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Summing Up
The India-UK FTA terms will mostly have a positive impact on the trade relations between the two countries. However, the Indian alcobev industry is discontent with the terms they’ll have to agree upon. How the government responds to their concerns and how further decisions are taken will be worth noting. And worry not, we’ll keep you updated about the same.
