Tariff Cut to open India to Scotch Whisky Growth

The India-UK Free Trade Agreement stands to revolutionise Scotch Whisky exports to the world’s largest whisky market, with tariffs set to drop from 150 percent to 75 percent when the deal takes effect next year. MARK Kent, Chief Executive Officer of the Scotch Whisky Association, discusses with SHALINI Kumar how the landmark agreement will open doors for distillers of all sizes, foster collaboration between Scottish and Indian producers, address the challenges of navigating India’s complex regulatory landscape and align the industry’s sustainability commitments with its growth ambitions.

How do you see the India-UK Free Trade Agreement (FTA) transforming the Scotch Whisky industry’s access to the Indian market, especially in terms of pricing, distribution and consumer reach for both standard blends and premium single malts?

The India-UK FTA has the potential to be transformational for many Scotch Whisky producers in the coming decades. India is the largest whisky market in the world and is among Scotch Whisky’s top export markets by volume. The current 150 percent tariff, which will halve once the deal comes into force next year, has been a significant barrier for many Scotch Whisky producers in accessing this important developing market.

We hope that this lowered tariff will, over time, allow more distillers to export their products to India which will give Indian consumers access to a greater variety of Scotch Whisky brands and expressions to choose from. It will also foster collaboration between our sector and Indian producers, giving the businesses that use Scotch Whisky as an ingredient, or for bottling in-market, greater access to bulk Scotch Whisky.

 What constraints or bottlenecks do you currently see in scaling up exports to India, and how might the UK and Indian governments as well as trade bodies help mitigate them?

Different companies will vary in their presence in the Indian market. Some are fully established there, some even have distilleries built in India, whereas some are just putting out their first single malt in the UK. The cross-section of our membership varies hugely. What matters to us as a trade body is supporting all of them to realise their ambitions in the Indian market, whatever the scale. The UK Government’s prioritisation of our sector both during the talks that led to the development of the FTA and now as we work towards its ratification has been incredibly valuable.

As a trade body, we have also been in talks with our supply chain partners, particularly cereal farmers, who are keen to understand more about how the FTA will impact Scotch Whisky production and, in turn, the demand for grain. There is still a long road from barley growing in the fields of Scotland to whisky appearing on the shelves in India. Having these conversations early on helps ensures that we are all aligned as we work towards boosting market access for Scotch.

The SWA works across many markets with differing regulatory regimes. What lessons or best practices from other markets will you adapt in the Indian context to protect brand integrity, Geographical Indication and counterfeits?

Our Legal Affairs team works closely with counterparts and advisers across many markets to ensure that Scotch Whisky is protected from fakes and that its world-renowned reputation is upheld. India is already one of our busiest markets and we have been proactive in protecting Scotch Whisky there for almost 40 years. Scotch Whisky has had protected Geographical Indication (GI) status in India since 2009, alongside other famous Indian GIs like Basmati rice and Darjeeling tea.

The legal system that supports these GIs also works to our advantage, as it does in other markets, and it means we are able to pursue cases under our own name. The largest part of our work involves opposing trademark applications which cover whisky and that feature elements suggestive of Scotland. The legal system in India can be complex and lengthy, and so maintaining a strong and consistent presence in the market over time is crucial.

What are the immediate priorities for the SWA in facilitating smoother business operations for member distilleries under the new trade environment, and in what ways can Indian and Scottish distillers collaborate to create shared value in both markets?

The Indian consumer is already very discerning when it comes to whisky. So much groundwork in educating the market on Scotch has been done. That said, ensuring smooth market access not just to India overall but to individual states, will be very important, particularly for smaller companies that will not have the capacity to take on the whole of India at once. The FTA’s implementation will be a positive opportunity for Scotch Whisky distillers to explore the Indian market with support from the UK Government, who have championed our industry’s growth prospects throughout the negotiations.

The FTA also has the potential to increase revenue for the Indian government at both federal and state level through an increase in sales as tariffs are lowered. Therefore, it is in everyone’s interest to ensure that the deal can come into effect quickly.

The Scotch Whisky industry is also keen to work with our colleagues in India on shared challenges and cross-sector investment opportunities, such as driving sustainable production methods and encouraging responsible alcohol consumption, which will benefit both industries and consumers.

 Decarbonising Scotch Whisky

The Scotch whisky industry is focused on long-term sustainability from grain to glass, and the sector’s work to decarbonise its operations and supply chain runs in tandem with its ambitions for growth. The industry has experienced market variations for generations, and the long-term nature of Scotch whisky is testament to the sector’s ability to adapt to changing conditions.

Ongoing dialogue with regulators in the UK and around the world is important to ensure the industry’s forward planning aligns with policies that address climate impact, while bearing in mind external factors such as the development of key growth markets.

India’s consumer base is diverse and evolving. How do you see Indian consumers influencing future Scotch Whisky trends, both in terms of product innovation and brand storytelling?

India is a huge whisky market and Scotch Whisky is currently just a small part of it, with Indian whisky dominating the domestic market and likely to continue doing so for the foreseeable future. Our immediate focus is working with the UK Government to get the deal ratified that is the first step in opening up the market for producers already present in India and for those keen to explore its potential. Giving Indian consumers greater access to the incredible variety of brands and expressions on offer from the Scotch sector is crucial, and over the long term we should see the category develop as market preferences evolve.

From a demand perspective, how do you assess India’s potential in volume and value terms for Scotch over the next 5–10 years? Do you have a projection for India’s share of global Scotch exports over that period or targets the SWA is working towards?

The SWA has campaigned to see an India-UK deal for many decades because of the potential for the Scotch category to grow in this important and evolving market. Right now, everything rests on the deal coming into force and on Scotch producers, at whatever stage they are in their India exports, being supported to grow sustainably in a complex and vast market. The Indian market is forecast to keep growing over the coming decades, and through the FTA we hope that Scotch Whisky exports will also continue to grow, particularly in terms of the diversity of choice for consumers and opportunities for bulk exports, both of which will support business development in India.