Indian alcobev industry offers cautious welcome to India–EU FTA

The sealing of the India–EU Free Trade Agreement (FTA), which provides for steep reductions in import duties on wines, spirits and beer, has elicited a largely measured response from India’s alcoholic beverages industry, with associations welcoming long-term opportunities while underscoring the need for safeguards for domestic producers.

Under the FTA, import duties on wines will be cut from 150 percent to 20 percent for premium wines and 30 percent for medium-range wines. Tariffs on spirits such as whisky, vodka, rum and gin will be reduced to 40 percent, while beer duties will fall from 110 percent to 50 percent. Imported European alcobev products could consequently become up to 20 percent more affordable in India.

Describing the pact as a “significant milestone,” Sanjit Padhi, the CEO of International Spirits & Wines Association of India (ISWAI) said, “The proposed reduction in import tariffs from 150 percent to 75 percent at entry into force, and further down to 40 percent for spirits and as low as 20 percent for wines, is a clearly welcome development.”

The deal would accelerate premiumisation and improve consumer choice. “A progressive FTA reinforces India’s position as a compelling investment destination and a growing export market for the alcobev sector. The FTA will further enable Indian brands and Bottled-in-India products to access international markets, strengthen global partnerships, and truly advance the vision of ‘Make in India’ on the world stage,” he added.

The Confederation of Indian Alcoholic Beverage Companies (CIABC) too welcomed the agreement. “The Indian Government has done commendable work which will prove beneficial for both trading partners,” said its Director General, Anant S Iyer. However, he stressed the importance of strict rules of origin, checks on under-invoicing and reciprocity in removing non-tariff barriers on Indian spirits in the European Union.

Importers described the step significant towards building a healthier, premium-led wine market in India. “Reduced import duties could encourage consumers to trade up to higher-quality European wines and provide much-needed margin flexibility for producers and importers to invest in brand building, consumer education and long-term market development,” said Sumit Sehgal, Co-founder of Aristol. He, however, cautioned that structural challenges must be addressed to fully realise the benefits of the agreement. “Label registration requirements, state-wise excise systems and complex compliance procedures remain key barriers,” he added.

Sumedh Singh Mandla, the CEO of AWS Global and VBev echoed similar sentiments. “The reduction of tariffs will broaden access to premium European labels. However, without aligned GST, state excise and compliance reforms, these gains will remain muted,” he said, adding that the industry needs a predictable and level playing field where competition is driven by quality and innovation rather than tax distortions.

Urging policymakers to focus on harmonisation and execution, he stated, “Thoughtful implementation can drive premiumisation, tourism and investment, while mechanical implementation risks a headline win with limited ground-level impact. This landmark deal should be used to build a world-class, responsible drinking culture in India, not merely cheaper imports.”

Meanwhile, Brewers Association of India (BAI) is of the view that the agreement is unlikely to materially affect the market in the near term. “Let’s not expect any impact in the market at least until 2027. Thereafter, for wines, the cut-off price will keep over 80 percent of the domestic industry unaffected,” said Director General Vinod Giri, noting that higher-priced wines remain niche. On beer, Giri observed, “Beer doesn’t travel well across borders, and major manufacturers are already here. So, we don’t think the FTA will dramatically impact the beer industry.”

He added that while companies may experiment more with imported products, this would primarily be for testing and innovation rather than scale. Firms may use imports to sample new products and gauge consumer response before committing to domestic production capacity.

From a domestic malt manufacturing perspective, Indian Malt Whisky Association (IMWA) Director General Maj Gen (Dr) Rajesh Chopra (retd) said, the FTA would “accelerate standardisation, investment in quality and clearer category definitions, particularly for Indian single malts,” while also strengthening the global positioning of Indian spirits in regulated European markets.

Rajesh added, “From an export perspective, the pact also helps position Indian spirits as legitimate global offerings rather than niche or experimental products. European markets are highly regulated and quality driven; sustained access will require consistency, traceability and long term brand building across the category.”

Domestic producers like IndoBevs also view the FTA as a test of Indian alcobev producers to compete on grounds of quality, scale and global positioning. According to its CFO Sharad Negi, “A calibrated reduction in duties will expand consumer choice and accelerate premiumisation across India’s on-trade and off-trade markets. That said, liberalisation must be phased and supported by safeguards such as minimum import pricing to avoid distortion of the domestic ecosystem, while parallel progress on non-tariff barriers in the EU is essential to ensure reciprocity.” If structured thoughtfully, the agreement can strengthen competition while unlocking new avenues for exports and innovation.