- UK-India FTA will reduce Scotch whisky tariffs from 150% to 40% over a decade
- Indian states may adjust excise duties, limiting consumer price reductions
- Premium Scotch prices may fall by Rs 200–300 per bottle initially
The UK-India Free Trade Agreement may reduce the price of Scotch whisky in India, but industry insiders say the market impact will be limited.
While customs duties on imported spirits will fall in phases, with tariffs on premium Scotch falling from 150% to 75%, then 40% over the next decade, how much cheaper the bottles get depends largely on Indian states' excise and pricing policies.
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Excise collections are a key revenue source for states, and many are expected to adjust the ex-distillery price or excise duty to protect their revenue. This can blunt the price cuts expected at the consumer level. Multinational companies may offer modest price reductions of 5–7% in the first six months to 12 months but are likely to reverse them gradually.
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In the premium segment, such as Johnnie Walker Black Label and Chivas Regal, prices may fall by Rs 200–300 per bottle. In the standard segment, including brands like Red Label or Ballantine's, the drop may be Rs 100–150. However, market dynamics in this segment are unlikely to shift significantly, given the narrow pricing gap with bottled-in-India whiskies like Teachers or Black Dog, which retail around Rs 1,500 in Delhi, according to inputs from Onkar Sharma, Partner at Khaitan & Co.
Interestingly, the FTA can trigger a shift in the production of these bottled-in-India whiskies back to the UK. With better economies of scale and automated processes, UK-based manufacturing may now be more cost-effective, potentially altering supply-chain decisions by producers.
"Consumers should not expect to see much change. FTA will not dramatically reshape the Indian whisky market, it will open new big business vistas for Indian producers," said Vinod Giri, director general of the Brewers Association of India.
He added that while Indian whisky makers, which import Scotch in bulk for blending, would benefit from duty cuts, the overall gains would largely reflect in company bottom lines, not shelf prices.
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