India has reduced the duty on whisky and gin imported from the UK from 150% to 75% under the free trade agreement (FTA) signed between the two countries in London on July 24. According to the trade deal, duty will be further reduced to 40% in the tenth year of the agreement. Despite the decrease in import duty by 50%, the impact on the final prices of premium brands in India is likely to be minimal, the New Indian Express reported.
UK-India Trade Deal: How 50% Duty Cut on Imported Alcohol Affects Tipplers' Pockets?
Though the move is expected to benefit manufacturers targeting the world’s largest alcohol market, its impact reportedly will be minimal since alcohol is a state subject and key revenue source, leaving the final decision—and consumer impact—in the hands of the state governments
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“Consumer prices for imported Scotch whiskey are not likely to change much. Most of the taxes on alcohol sit in states, and even if all customs duty reduction is passed on, the impact on consumer prices of imported Scotch whiskies will be in the range of Rs 100-300 per bottle,” liquor industry expert and director general of the Brewers Association of India, Vinod Giri, told the New Indian Express.
The India-UK FTA was signed by commerce minister Piyush Goyal and his UK counterpart Jonathan Reynolds after more than three years of negotiations. The deal is said to boost bilateral trade by $35 billion in the long run.
The reduction in tariff will be applicable to both bottled-in-origin (BIO), bulk imports, which are used for making bottled-in-India (BII) and Indian made foreign liquor (IMFL).
While the development has been projected to benefit manufacturers eyeing the world’s biggest alcohol market, the expert cited in the report claims that the move will have minimal impact, as alcohol is a state subject and is a crucial source of revenue for state governments. Hence, the decision the states make will define the impact on the end consumer. Additionally, he said that since the offering in the whisky segment is so wide in terms of price range, the move is reportedly unlikely to win these brands any new consumers.
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On the other hand, the International Spirits and Wines Association of India (ISWAI) held an optimistic stance on trade deal for the alcoholic beverage sector. ISWAI represents premium alcoholic beverage companies in India.
“The deal will significantly benefit Indian consumers, as premium international spirits will become more accessible, thereby accelerating the ongoing trend of premiumisation,” said ISWAI CEO Sanjit Padhi, according to PTI.
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