July 31, 2025

The recent India-UK trade deal has halved the import tariffs on Scotch whisky to 75%, a move that theoretically should please whisky enthusiasts in India. However, the reality reflects a more complicated picture due to India's intricate tax structure. In a country that houses over 1.4 billion people, alcohol regulation is decentralized with each of the 28 states and 8 union territories imposing their own taxes on alcoholic beverages, contributing significantly to the final consumer price. Currently, imported Scotch whisky faces not only the customs duty but also various local levies and fees, including excise tax and handling charges. Consequently, liquor industry insiders estimate that the overall price of Scotch whisky in India will see a reduction of less than 10%, a figure that leaves much to be desired given the expectations that a trade deal can bring. Some industry executives warn that the limited reduction might not spur any real change, stating that the cut “won't be a gamechanger”, primarily because duty accounts for less than 25% of the final retail price of imported spirits in most states. Consumer and retail industry leader Naveen Malpani of Grant Thornton Bharat noted that despite the import duty representing about 10% to 20% of the average retail price, other local taxation surpasses this figure considerably. As a result, although the tariff reductions may enhance brand variety in the premium sector of the market, they are unlikely to trigger a significant increase in demand. To illustrate the impact of these taxes, let’s take a look at some local prices. For instance, a bottle of Chivas Regal blended Scotch aged for 18 years initially costs approximately 6,288 rupees ($72) post-import tariffs, but additional taxes briskly escalate the final retail price to roughly 13,560 rupees ($156) in Kerala. Similarly, the Johnnie Walker Blue Label retails for about 30,570 rupees ($352), while its after-discount price in California is around $180. Despite these challenges, the Indian spirits market remains attractive, boasting a valuation of $37 billion last year, second only to China and the United States. Major players like Diageo and Pernod Ricard reported revenues nearing $6 billion in India last year, a testament to the enduring demand for spirits in the region. Furthermore, the Scotch Whisky Association highlighted India as Scotch whisky’s largest export market by volume, with over 192 million bottles shipped to the nation in 2024 and a 200% growth in volume over the past decade. However, operating in this lucrative market is not without its difficulties. The extensive taxation is compounded by a labyrinthine regulatory environment that requires companies to obtain yearly approvals for labelling and pricing. In a past discussion, Pernod's former South Asia CEO remarked that India is likely “the most complex market” for the international whisky industry. In light of these challenges, local whisky producers have become more competitive, offering Indian single malts that appeal to a market increasingly interested in bespoke cocktails and more sophisticated drinking experiences. This shift toward local products has been recognized by industry experts. Rajesh Chopra, director general of the Indian Malt Whisky Association, noted that younger consumers are gravitating towards Indian single malts over traditional Scotch. He also suggested that lower tariffs could lead to more collaboration between Indian and UK distilleries, further enriching the market for whisky lovers in India. In conclusion, while the India-UK trade deal aims to invigorate the Scotch whisky market in India through reduced tariffs, the reality is that a complex tax regime and rising local competition will limit the price benefits for consumers. The blend of high taxes and evolving consumer preferences creates a landscape that Whisky brands must navigate carefully, as local products gain traction in the hearts of Indian consumers.

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Tags: Scotch whisky, India-uk trade deal, Import tariffs, Alcohol taxation, Whiskey market,