Whisky tariffs halved in ‘transformational’ UK-India trade deal
The UK government has struck a long-awaited trade deal with India, which will eventually see tariffs on gin and Scotch whisky fall to 40%.
The agreement announced today (6 May) by the Department for Business and Trade has been described as the ‘most significant’ agreement since the UK left the European Union, and will see tariffs on whisky and gin slashed from 150% to 75%, before falling to 40% by the 10th year of the deal between the two nations.
Speaking to reporters, UK prime minister Sir Keir Starmer hailed the “historic day for the United Kingdom and for India. This is the biggest trade deal that we, the UK, have done since we left the EU,” he said, adding that this is also the most ambitious trade deal that India has ever done. “This will be measured in billions of pounds into our economy and jobs across the whole of the United Kingdom, so it is a really important, significant day. ”
Indian prime minister Narendra Modi took to X to welcome the agreement, calling it a historic milestone, while business and trade secretary Jonathan Reynolds said in a statement: “By striking a new trade deal with the fastest-growing economy in the world, we are delivering billions for the UK economy and wages every year, and unlocking growth in every corner of the country, from advanced manufacturing in the North East to whisky distilleries in Scotland.
“In times of global uncertainty, a pragmatic approach to global trade that provides businesses and consumers with stability is more important than ever.”
‘Significant progress’
Mark Kent, CEO of the Scotch Whisky Association, welcomed the “transformational” deal between the UK and India: “The UK-India free trade agreement is a once-in-a-generation deal and a landmark moment for Scotch whisky to the world’s largest whisky market.
“The reduction of the current 150% tariff on Scotch whisky will be transformational for the industry. The deal has the potential to increase Scotch whisky exports to India by £1 billion [US$1.34bn] over the next five years and create 1,200 jobs across the UK.”
India is currently the largest whisky-drinking market in the world, importing more Scotch whisky by volume than any other country.
In 2024, Scotch whisky had a 2% total share of the Indian whisky market, according to the SWA, but this figure is expected to rise as prices lower due to the new lower tariffs.
Kent added: “The deal is good for India too, boosting federal and state revenue by over £3bn [US$4.08bn] annually, and giving discerning consumers in a highly educated whisky market far greater choice from SME Scotch whisky producers, who will now have the opportunity to enter the market.
“This agreement shows that the UK government is making significant progress towards achieving its growth mission, and the negotiating teams on both sides deserve huge credit for their dedication.
“The Scotch whisky industry looks forward to working with the UK and Indian governments in the months ahead to implement the deal which would be a big boost to two major global economies during turbulent times.”
‘Welcome lift for exporters’
It has previously been estimated that consumers in India could enjoy a 7.5% reduction in spirits prices should the region’s 150% tariff laws be halved, while Chivas Brothers suggested that a trade deal such as this between the UK and India could double the size of the Scotch whisky market in five years,.
Diageo CEO Debra Crew concluded that today’s agreement was a huge achievement by prime ministers Modi and Starmer, and ministers Piyush Goyal and Reynolds.
“All of us at Diageo toast their success,” Crew said. “It will be transformational for Scotch and Scotland, while powering jobs and investment in both India and the UK. The deal will also increase quality and choice for discerning consumers across India, the world’s largest and most exciting whisky market.”
The deal was also welcomed by the British Chamber of Commerce, which said it was a “welcome lift for our exporters”, while William Bain, head of trade policy, said: ”Against the backdrop of mounting trade uncertainty across the globe, these tariff reductions will be a big relief. Products from Scotch whisky to clothing will benefit and this will give UK companies exporting to India a clear edge on increasing sales.”
Meanwhile, Marley Morris, associate director for trade at independent charity IPPR, said: “This deal will cut tariffs, boost growth and create jobs. It shows that even in a tough global economic climate, the UK can be the grown-ups in the room – and turn uncertainty into opportunity, in stark contrast to Trump’s approach.”
In February, it was announced that India would cut its tariffs on American whiskey from 150% to 100%.
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