India–EU FTA a ‘Double-Edged Sword’ for Domestic Liquor Market — Explained

What is already being dubbed the “mother of all trade deals”, India and the European Union finalised a Free Trade Agreement (FTA) yesterday after nearly two decades of negotiation. The pact promises sweeping tariff reductions on a wide range of goods, from cars and machinery to foodstuffs and alcoholic beverages — a category that has long been among the most protected in India’s import regime.

For decades, imported wines, whiskies, gins and other spirits sold into India carried some of the highest duties in the world — often exceeding 150% on wine and spirits alike. Under the FTA, those duties will be gradually slashed: wine tariffs will fall to between 20% and 30% on premium and mid-range categories, while spirits’ duties will be reduced to around 40% and beer to roughly 50%t.

The reality on retail shelves

Industry executives estimate that once tariff cuts are fully phased in, many European wines and premium spirits could become 7–10% cheaper for consumers than current prices. But the picture is not uniformly rosy.

As Nikhil Agarwal, CEO of All Things Nice, cautioned, the benefits will passed only to wines priced above roughly €2.5 ex-cellar per bottle — not the lower-priced categories. “The reduction is smaller year on year for the forthcoming years, which eventually will result in lower prices,” he said. “However, one must note and address the elephant in the room. The euro to Indian rupee has shot up by 20% in the last year alone, with expectations that it might reach ₹125 to €1 in another year. At this rate, any and all benefits from the duty reduction will be nullified.”

Competitive pressure — and opportunity

Industry leaders say the deal is not simply about cheaper foreign alcohol. It signals a competitive jolt that could push Indian producers to refine their craft, invest more in branding, and align themselves with global standards — changes that could bolster exports as well as domestic quality.

“As international products enter India under a more balanced tariff framework, Indian producers will face stronger competition, which typically leads to improved transparency, innovation and alignment with global best practices,” said Rajesh Chopra, director general of the Indian Malt Whisky Association (IMWA).

But experts also warn that while importers and urban consumers may celebrate lower duties, the adjustment will be complex for domestic manufacturers. Lower trade barriers mean sharper competition from well-established European brands. Shares of some Indian alcohol companies dipped immediately after the FTA announcement, reflecting investor unease over near-term pressure.

“For domestic producers, this shift is a double-edged sword,” said Vedant Kedia, Whole Time Director at MEBL. “While it brings aggressive competition from global labels, it also accelerates the ‘premiumisation’ of the entire Indian market. With the gap narrowing, the focus is shifting to high-complexity innovations that were previously niche.”

He added that while foreign brands currently enjoy strong recall, the market is evolving beyond the phase where an ‘imported’ tag alone justified a higher price. “We are entering a phase where consumer choice will be driven by the brand’s story and the freshness of the product rather than its country of origin.”

What is clear by early 2026 is that the deal has already cracked open the doors to a new era — one where Indian alcohol beverages must compete not just with foreign labels, but with evolving domestic tastes and rising global aspirations.