Bracing for impact: is the UK-India FTA a cause for celebration?
After three years of negotiations, the UK and India have signed a trade agreement, meaning Scotch whisky brands are ready to capitalise. But how will this impact local producers?
*This feature was first published in the August issue of The Spirits Business magazine.
India has long been seen as a complex market, similar to the US, with its states having different regulations. But it’s a country that offers plenty of opportunities for spirits.
A big development came in July 2025 when a long‐awaited UK‐India free trade agreement (FTA) was signed after three years of negotiation. The deal is being welcomed as a major win for Scotch whisky and British gin, as tariffs on their exports to India have been slashed in half. The move has cut import tariffs from 150% to 75%, and it will drop to 40% when the deal hits its 10th year.
Many members of the industry believe this deal has provided a much needed boost for the sector after several years of economic downturn and increased costs for businesses.
Malcolm Leask, managing director of International Beverage, says the announcement is very positive news for the Scotch whisky industry. “The past few years have been turbulent for all businesses in the sector, with much uncertainty and the need to navigate a complex mix of challenges in the global marketplace. While some of these factors remain, an FTA with India provides a much needed boost to confidence, and will build a brighter economic outlook globally for our industry. As a business already investing in our brands and business network in India and across Asia, this is a huge step towards better trading conditions, and unlocking long‐ term global growth.”
William Wemyss, managing director of Wemyss Family Spirits, owner of Kingsbarns Distillery in Scotland and Darnley’s Gin, also praises the deal: “India has long been seen as the single most exciting growth market for Scotch. It is home to the largest population of whisky drinkers in the world, yet, until now, punitive tariffs of 150% have held us back. For years, whisky producers like us have been locked out of meaningful access despite strong demand and growing appreciation for high‐quality spirits. The phased reduction of tariffs, from an immediate cut from 150% to 75%, with a target of 40% over the next decade, changes everything. It finally gives us a fairer footing to compete in a market that has been out of reach for too long.”
The Scotch Whisky Association (SWA) also believes the deal will provide long‐term benefits, including further investment and jobs. However, the trade group has called for more action from the UK government to support distillers, particularly smaller ones, as they look to take advantage of the deal. Jean‐Etienne Gourgues, CEO at Chivas Brothers, Pernod Ricard’s Scotch whisky arm, believes the FTA will “unlock one of the world’s biggest whisky markets”, and enable the company to reach a “wider range of Indian consumers seeking premium, world‐ class spirits”.
In a statement last month, he said: “The deal will support long‐term investment and jobs in our distilleries in Speyside and our bottling plant at Kilmalid, and help deliver growth in both Scotland and India over the next decade. It’s clear that the future of Scotch is global, and we believe India will be a key partner in that journey.”
Largest whisky market
Whisky is indisputably the biggest category in India. IWSR senior researcher Jason Holway says: “India is, by some distance, the world’s largest whisky market, and the majority is supplied by local players. Historically, extra neutral alcohol‐based whiskies, many at value price points, have dominated demand but the steady emergence of uptrading has seen bulk imports of Scotch and other whiskies incorporated as ingredients into better‐ quality Indian variants.”
Data from the SWA shows that India has taken back its position from France as the world’s number‐one Scotch whisky export market by volume, with 192 million bottles exported in 2024 compared with 167m in 2023. Data from IWSR suggests Scotch whisky in India will rise by a compound annual growth rate (CAGR) of 7% in both volume and value from 2024 to 2029, following a volume rise of 14% and value growth of 11% (CAGR 2019 to 2024). Growth is smaller for Indian whisky in its home market, which is expected to see a 3% volume and value increase over the five years from 2024 to 2029.
While many UK‐based and international businesses support the deal, there are still concerns over the impact of the duty reduction on domestic brands.
The Confederation of Indian Alcoholic Beverage Companies (CIABC) says the move could result in an “influx of lower‐priced Scotch whiskies”, an opinion that has been echoed by local producers such as Allied Blenders & Distillers (ABD).
The CIABC has called for a minimum import price (MIP) clause to prevent many cheap and low‐quality spirits from entering the market, while excluding a fee on the import of bulk Scotch used by Indian producers for Indian‐ made foreign liquor (IMFL) production.
In a statement, the CIABC says: “This distinction would ensure fair competition, support domestic value addition and maintain the integrity of spirits and wines available to Indian consumers.”
Disrupt the balance
Rajesh Parida, ABD’s director of corporate affairs, corporate social responsibility and PR, is concerned that the reduction of duty on bottled Scotch, particularly without an MIP, could “potentially disrupt the balance” in the IMFL market.
He says: “This may put pressure on the positioning of Indian blended spirits and malt brands, which already face higher production costs and state taxes. A fair MIP would help prevent dumping of cheaper imports into India.”
One positive factor that could come out of the reduced import tariff is an increased awareness of Indian single malts, according to Indian whisky maker John Distilleries. Paul John, founder and chairman of the Goa‐based company, says: “Once more brands come into the market, there will be more awareness created for single malts. With India being such a huge whisky market, you’re going to see a lot of people upgrading to single malts.”
In 2017, the company, which produces the Paul John Indian single malt brand, secured investment from Buffalo Trace owner Sazerac. With Sazerac’s extensive presence in Europe, John believes there are opportunities to grow the John Distilleries business outside of India, and the trade deal with the UK could present an advantage in that market. It could also offer an opportunity for John Distilleries to import Sazerac brands in India, including its Bourbon portfolio.
Bulk imports
ABD also notes that another benefit for local producers is lower duties on bulk imports, which “create a strong incentive for us to build long‐term partnerships with UK‐based Scotch bulk manufacturers”, says Parida. “This will enable us to explore more efficient supply‐chain models, reduce landed costs, and strengthen margins.”
For Amrut Distilleries, the deal presents a challenge for premium spirits, especially Indian whisky brands, due to lower pricing and increased competition. Rakshit Jagdale, managing director of Amrut, says some local consumers may trade up from Indian whiskies to Scotch whiskies such as Johnnie Walker Black Label or Chivas 12, which have become more affordable following the deal. “That will adversely impact the premium segment in Indian whisky,” he warns. “There will be a pressure on our margins in India for premium and luxury alcoholic brands that we are distilling and producing in India. Certainly, we’ll have to drop prices to compete against Scotch.”
Gin is another category that is growing in India, evidenced by a recent acquisition from Diageo in a majority stake in Hapusa Gin maker Nao Spirits.
IWSR data shows that imported gin is seeing strong growth in the market, rising in volume by 28% (CAGR 2019 to 2024). However, it remains a small segment, representing 10% of all gin consumption in India. In comparison, locally made gin saw a 1% decline over the past five years. Imported gin is expected to post a 10% volume CAGR over the next five years (2024‐2029) in India, significantly higher than local gin, at a growth rate of 2%.
A trade deal in the UK could mean well‐established gin brands look to India as their next export focus. IWSR’s Holway says: “Gin is a category that is already well‐ appreciated in India. UK gins get the opportunity to benefit from and reinforce that craft sensibility, and premium Indian whiskies might increasingly trade on similar attributes overseas. Recent successes have encouraged Indian distillers, including some multinationals, to invest locally in the liquid required to underpin such a strategy. That will be coming on stream to support such initiatives in the next few years.”
Holway adds that gin is the category “that most obviously offers a platform to indigenous and regional flavours and ingredients that otherwise find little place in Indian alcobev. It will be interesting to see which UK‐made, craft‐oriented gins offer sufficient relevance or difference to prove interesting to Indian consumers.”
Bigger savings
Holway says that there is still uncertainty over how the tariff reduction on Scotch will play out in India. He explains: “There are already several different opinions about the possible impacts. This needs to become a little clearer before we can conjecture how [Indian‐made foreign liquor] will be affected. There seems to be a consensus that the halving of tariffs on Scotch could deliver an on‐shelf saving of around 10% to 12% on mainstream Scotch, perhaps bigger savings on higher‐priced expressions. “
However, the consumer experience is very unlikely to be a simple matter of mathematics. Brand owners, in theory, have the option to pass on savings or enhance their margins. “This ignores the reality that there will always be actors willing to immediately Paul John: more awareness means more people will upgrade to single malts India 45 ‘There are already several different opinions about the possible impacts. This needs to become a little clearer before we can conjecture how Indian-made foreign liquor will be affected’ compete on price – and these may not always be existing participants in the Scotch/whisky category.”
Holway also points out that as excise taxes differ across India, the “tariff reduction impact on on‐shelf pricing for Scotch will vary in as many ways as there are states. As the states almost certainly attempt to capture more revenues from the alcobev industry, will their tax and excise plans distinguish between domestic and imported brands? Will the pricing differentials narrow? Will those brands that blend in bulk Scotch become more affordable and appealing to local consumers? At the moment there are more questions than answers.”
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