Duty Cut On UK Scotch Under FTA To Help Indian Distillers Cut Costs, Expand Premium Offerings

New Delhi: Indian premium whisky distillers expect that the duty concessions on Scotch imports under the India-UK free trade agreement will help improve their margins and speed up growth.

A lower customs duty on bulk Scotch, used by many Indian Made Foreign Liquor (IMFL) companies for blending, will reduce costs and make premium spirits more affordable in the Indian market, which is the world's largest for whisky, they added.

Under the trade pact, announced earlier this month, India will reduce duties on UK whisky and gin from 150 per cent to 75 per cent, and further to 40 per cent by the tenth year.

Home-grown players like Radico Khaitan, Allied Blenders & Distillers (ABD), and John Distilleries said the move will give Indian consumers more choices and better access to high-quality spirits.

Radico Khaitan, the largest importer of Scotch whisky for blending and which owns award-winning single malt 'Rampur' and Jaisalmer Indian Craft Gin, said the FTA has "significant potential" for cost advantages through the expected reduction in customs duties.

"Radico plans to import scotch malt worth Rs 250 crore in fiscal year 2025-2026, and this treaty, therefore, benefits us substantially," Radico Khaitan MD Abhishek Khaitan told PTI.

Sharing similar views, Allied Blenders & Distillers (ABD), makers of Officer's Choice Whisky, said it has opened new avenues for collaboration, besides helping make the super-premium to luxury portfolio more accessible.

"...this agreement will also benefit ABD's Super-Premium to Luxury portfolio by making these products more accessible. We anticipate this will offer Indian consumers greater choice and the opportunity to enjoy a wider range of high-quality spirits," the company said.

According to data from the Scotch Whisky Association, India was the largest market for Scotch by volume in 2024, with 192 million bottles exported. In value terms, it ranked fourth with exports worth 248 million British pounds.

However, Amrut Distilleries MD Rakshit N Jagdale raised concerns about the duty concessions, saying the steep reduction in duties could hurt India's domestic alcohol industry.

The reduction of import duties on Scotch whisky from 150 per cent to 75 per cent in one step is "alarmingly" steep, he said.

"This move risks disincentivising future expansion projects within the Indian distillation sector projects that not only contribute to manufacturing GDP but also generate significant direct and indirect employment across the supply chain, from agriculture to retail," he said, adding that it will help increase in import volumes and exports are likely to be outpaced.

While openness to global trade is vital, it must not come at the cost of long-term self-reliance, manufacturing growth, and job creation, Jagdale added.

John Distilleries Chairman Paul P John said this FTA may have a short-term impact on Indian products, but he hopes that it will allow better ease of business for Indian products in the UK.

On the impact on retail pricing, John said, "At this stage, it's premature to comment on specific pricing strategies. We are monitoring the developments of the India-Uk FTA and will assess the implications once the details are finalised".

According to data from the Confederation of Indian Alcoholic Beverage Companies (CIABC), sales of IMFL have grown 14 per cent by volume to 385 million cases in FY23, in which the premium products priced over Rs 1,000 per 750 ml bottle have grown over three times from the industry average to 45 per cent.

In FY23, whisky sales volume of 243 million cases of 9 litres each was recorded.

Moreover, some of the homegrown brands of single malts as Amrut, Paul John, Indri, Rampur and Gianchand, among others, have even surpassed global brands in 2023.

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