India-UK FTA To Accelerate Premiumisation

The India–UK Free Trade Agreement marks a pivotal moment for the alcohol industry, with phased tariff cuts, procedural reforms and safeguard provisions. By easing market access and reducing costs, the deal has the potential to reshape consumption patterns, boost premium imports and alter bilateral trade dynamics in the alcobev sector. However, its impact on the Indian alcobev industry will not unfold in isolation. It will be determined as much by global headwinds, domestic taxation and state-level duties as by the tariff reforms themselves.

‣ NITA Kapoor

For Scotch whisky, one of the UK’s most iconic exports, the pressure is already evident. Fresh HM Revenue & Customs data for H1 2024 shows a fall in export value of 18 percent to £2.1 billion, while volumes slipped 10.2 percent to 566 million bottles. The divergence between value and volume underscores a hard truth: Scotch is moving more bottles, but at lower prices, as consumers in China, France and the US scale back under economic pressure. Adding to the UK industry’s woes are renewed US tariffs and excise hikes that have pushed taxes to 70 percent of a bottle’s retail price.

Amidst these challenges, India stands out as the bright spot for the Scotch industry. India is expected to be a hunting ground not just for volumes but also for acquisitions, mergers, collaborations and tieups. Some deals have already been announced, and more are surely on the horizon. The FTA’s phased tariff cuts will play a pivotal role. On day one of implementation, expected in H2 2026, tariffs on Scotch whisky and gin will drop from 150 percent to 75 percent, and by 10th year, duties will be reduced further to 40 percent.

Domestic Dynamics

There are important exceptions and domestic dynamics to note. No minimum import price for British alcohol has been included; wine has largely been excluded from concessions; and beer has been granted only limited relief, with details still awaited.

elief, with details still awaited. However, India’s state-level taxes (typically 60–80 percent of MRP) will remain a key barrier and will tend to favour domestic brands. Even at 75 percent customs duty, much of the benefit may be absorbed at the state level.

Meanwhile, Indian producers are already leveraging locally imported bulk Scotch to significantly upgrade quality, creating products that stand shoulder to shoulder with global offerings. The jury is still out on whether urban Indian consumers will lean towards imported S Scotch or high-quality Indian blends, but competition is clearly sharpening.

 The Net Effect

The India–UK FTA is not a tidal wave but a rising tide. For Scotch and gin it opens doors wider: imported labels will be more accessible, premium bars better stocked and consumers spoilt for choice. Beer receives only a gentle push, remaining a niche indulgence in urban settings, while Indian wines, largely untouched by tariff cuts, breathe easy for now.

At its core, the FTA accelerates India’s premiumisation journey, raising the bar for consumers while compelling domestic players to sharpen their offerings. The next decade will see India’s alcobev landscape reshaped not by a single deal but by the convergence of global headwinds, local taxation realities and the rising strength of Indian demand.

Note: Nita Kapoor is Co-founder at Integrated Insights Consulting (IIC) & former CEO of ISWAI. Views expressed are personal . [email protected]