Scotch half-price? UK–India trade deal set to stir up premium whisky sales

File photo

India’s fast-growing appetite for premium and luxury spirits is set to get a major push, with the UK–India free trade agreement slashing steep import duties on products like Scotch whisky.

The deal—finalised on May 6 after three years of negotiations—reduces Scotch whisky tariffs from 150 percent  to 75 percent initially, with a further drop to 40 percent over 10 years.

The move is expected to make imported premium spirits more accessible to Indian consumers, fuelling aspiration-led consumption, according to analysts. "The demand environment (for liquor) remains resilient despite a slowdown in discretionary demand, owing to regulatory tailwinds, increasing salience towards the premium segment, and cost optimization initiatives," HDFC Securities wrote in a note last month.

Indian spirits market is undergoing a profound shift. Consumers are trading up, and the industry is experiencing a wave of premiumisation across categories — particularly whisky and craft spirits, driven by rising disposable incomes, global exposures and evolving preferences.

"With the Indian spirits industry witnessing an increasing shift toward premium and luxury brands, we are well-positioned to capitalize on long-term opportunities in this evolving market," Radico Khaitan said in its Q1 investor presentation this month.

With the trade barriers softening, UK distillers might explore bottling partnerships, joint ventures, or distribution pacts with Indian firms, according to analysts.

Initially, Scotch had barely a 2 percent  share in India despite the country being the second-largest market by volume, held back by high import tariffs, complex state-level excise duties, and market access barriers.  “The deal has the potential to increase Scotch Whisky exports to India by 1 billion pounds over the next 5 years and create 1200 jobs across the UK. The deal is good for India too, boosting federal and state revenue by over £3bn 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," said Scotch Whisky Association (SWA), a UK-based trade body.