Shares of liquor companies--United Breweries and United Spirits fell up to 2 percent in opening trade after the government slashed tariffs on US bourbon whiskies, makin it cheaper in India. The new tariffs will impose a basic customs duty of 50 percent on bourbon, along with an additional 50 percent levy, making the total tariff 100 percent, still lower than the previous 150 percent.
However, the revised tariff applies only to bourbon whiskies, which are exclusively made and aged in the US, while other alcoholic beverages remain subject to the previous 150 percent tax rate. Global liquor giants like Diageo and Pernod Ricard, key players in India’s $35 billion spirits market, have long raised concerns over the country’s steep import duties on foreign liquor.
While liquor stocks witnessed a strong negative reaction to the news as soon as the market opened, they managed to pare much of the early losses soon. At 09.25 am, shares of United Spirits were trading at Rs 1,353.95 while United Breweries was at Rs 2,040.50 on the NSE.
Follow our market blog to catch all the live action
This also comes after US President Donald Trump criticism of India's high tariffs on US goods, calling it out as "unfair" trade levies in the country. Trump, following his recent meeting with Indian Prime Minister Narendra Modi at the White House, has been outspoken about the difficulties American businesses face in India. He has further threatened to impose reciprocal tariffs on countries that impose high duties on US goods, with India being in the list.
Abneesh Roy, Executive Director - Research at Nuvama Institutional Equities, told CNBC-TV18, highlighted that the recent price hike in Telangana will have a meaningful impact on United Breweries' margins. Despite that, Roy believes that bourbon remains a really small category in India to be significantly affected by lower duties, and feels that a bigger trigger for the alco-beverage sector will be the UK FTA agreement.
Alongisde that, Roy praised the new MD of UBL, noting that they are doing a good job at the company. Roy sees the 15 percent price hike for Telangana as a positive move.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
