India-UK FTA to slash tariffs on Scotch and Gin by half

In a historic move for the spirits industry, India has agreed to cut import tariffs on Scotch whisky and gin by up to 75 percent duties from the current 150 percent.

By Spiritz Desk 06 May 2025 in Stories All Articles

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In a historic move for the spirits industry, India has agreed to cut import tariffs on Scotch whisky and gin by up to 75 percent duties from the current 150 percent. The development comes as part of a landmark Free Trade Agreement (FTA) signed between India and the United Kingdom on Tuesday, which is expected to significantly boost bilateral trade and investment.

The tariff cut, long sought by UK distillers, is set to open up India’s vast and fast-growing market to premium British spirits, especially Scotch whisky and craft gin — a segment currently constrained by high import duties.

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Calling the agreement a “historic milestone,” Prime Minister Narendra Modi said, “These landmark agreements will further deepen our Comprehensive Strategic Partnership. They will catalyse trade and investment, and unlock new growth opportunities in high-value sectors such as premium alcoholic beverages.”

UK Prime Minister Keir Starmer echoed the sentiment, noting, “This deal is a clear win for British businesses and consumers. It delivers on our promise to reduce trade barriers and bring world-class British products from Scotch to gin, to global markets like India.”

Negotiations for the FTA, which had seen delays over alcohol and automobile tariffs among other issues, resumed in February after a nine-month pause. The final breakthrough followed back-to-back visits by Indian commerce minister Piyush Goyal to London, culminating in agreement on long-contentious issues, including the alcohol duty reduction.

Bilateral trade between India and the UK reached £42.6 billion in 2024, and both sides expect the new agreement to add billions more in coming years, along with jobs and innovation.

Prime Minister Modi added that he looked forward to welcoming PM Starmer to India soon to “celebrate this achievement and chart the future of our strategic ties.”

However, Confederation of Indian Alcoholic Beverage Companies (CIABC) expressed cautious optimism over the India-UK Free Trade Agreement, noting that key concerns of the domestic industry may not have been fully addressed. “We hope the FTA includes a minimum import price (MIP) to prevent under-invoicing and dumping, along with removal of non-tariff barriers that currently restrict Indian alcobev exports,” said Anant S. Iyer, Director General, CIABC. He warned that if similar duty reduction frameworks are extended to other FTAs with the EU or US, domestic players, including Indian winemakers, could face severe disadvantages.

CIABC also urged the central government to ensure fair treatment of Indian-made products by advising states like Maharashtra, Kerala, and Odisha to review excise concessions currently favoring imported spirits and wines. “With India targeting $1 billion in alcobev exports by 2030, ensuring meaningful market access and policy parity is crucial,” Iyer added. He emphasized that while Indian spirits such as whisky, rum, and gin are earning global recognition, their export potential remains hindered without structural trade support.

The International Spirits and Wines Association of India (ISWAI) has hailed the UK-India Free Trade Agreement as a landmark step for the alco-beverage sector. “The reduction in tariffs offers significant strategic benefits for both countries,” said Sanjit Padhi, CEO, ISWAI. He emphasized that the deal will make premium international brands more accessible to India's growing base of aspirational consumers, enriching their experience and boosting growth in allied sectors like tourism and hospitality.

Padhi added that the agreement is expected to accelerate the premiumisation trend in the Indian alcobev space and strengthen state revenues. “This is a win-win for all stakeholders, fuelling trade, attracting investment, and fostering the exchange of best practices,” he noted, calling it a reflection of India and the UK’s shared commitment to deepening economic ties and ensuring fair, balanced trade.

Further details on the FTA rollout, including timelines for tariff reduction, are expected to be formally released by both governments shortly.