Tariff cuts on American alcobev unlikely to dent domestic market: Experts

Duty concessions on American whiskey and wine agreed under the interim India–US trade arrangement are unlikely to significantly disrupt India’s robust domestic alcohol market, according to industry analysts and trade experts. Despite expectations of tariff relief, domestic spirits producers believe structural factors and consumer preferences will keep imported American products on the fringe of the market.

Industry figures point out that any tariff reduction is expected to be paired with a minimum import price requirement, similar to provisions in trade agreements India has signed with Australia, the European Union and the United Kingdom. This mechanism, designed to prevent deep discounting, could blunt the competitive impact of lower duties.

According to the India-US joint statement on interim trade deal on the wine and spirits, “India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.”

Current sales figures illustrate the scale of the challenge for American brands: American whiskey accounts for barely 0.1 percent of the Indian whiskey market, with total sales around 229,000 nine-litre cases. By contrast, Scotch whisky has a more than 3 percent share and Irish whiskey just under 0.2 percent.

Anant S. Iyer, Director General of the Confederation of Indian Alcoholic Beverage Companies (CIABC), underlined the domestic industry’s cautious stance. “CIABC is not against reduction in import duty, but wants it in a phased manner. It hopes that the Government will address issues raised by CIABC relating to removal of non-tariff barriers across FTAs and ensure a fair and level-playing field against imports. The Indian industry is already at a disadvantage compared to manufacturers from developed countries due to high capital and operational costs and restrictive licensing regimes.”

On the India – US trade deal, Sanjit Padhi, CEO, International Spirits and Wines Association of India (ISWAI), said, “The recently announced India–US trade deal is an encouraging development. While the announcement signals an intent to rationalise tariffs, we await greater clarity on sector-specific provisions and their implications, particularly for alcoholic spirits.”  

Vinod Giri, Director General of the Brewers Association of India, noted that Bourbon and Tennessee whiskies tend to have darker colours and stronger flavour profiles that appeal to a more niche audience. “Pricing is not the main barrier to consumer adoption, as has been evidenced by the very modest performance of bottled-in-India Jim Beam that retails at a very affordable price below locally bottled Scotch whiskey. So, duty reduction on bourbon will not make any big impact on the premium whiskey market.”

Indian government officials have repeatedly assured that the interests of domestic spirits makers will be protected in the final trade arrangement.

With the interim agreement still being finalised, both sides are watching closely how tariff structures, import controls and market access commitments will shape the future of India-US liquor trade.