The historic India-UK Free Trade Agreement (FTA), signed in London during Prime Minister Modi’s visit, is set to transform how premium British spirits like whisky and gin are priced in India. Under the agreement:
- Import duty on UK spirits will drop from 150% to 75% immediately
- It will be further reduced to 40% in 10 years
This move is being touted as a game-changer, especially for premium liquor brands, which until now were unaffordable to most Indian consumers due to massive taxes.
How Much Will Whisky Actually Cost?
Although the central import duties are being halved, most liquor taxation happens at the state level through excise duties, VAT, and cess, which will remain unchanged. As a result, the final price drop will be minimal, experts say.
Here’s a comparison of old vs new prices for a typical ₹5,000 bottle of imported Scotch whisky (based on Delhi pricing):
| Component | Current (150% Duty) | After FTA (75% Duty) | After 10 Years (40% Duty) |
|---|---|---|---|
| Base Import Price | ₹1,000 | ₹1,000 | ₹1,000 |
| Import Duty | ₹1,500 | ₹750 | ₹400 |
| Subtotal (before state taxes) | ₹2,500 | ₹1,750 | ₹1,400 |
| State Taxes & Markup | ₹2,500 | ₹2,500 | ₹2,500 |
| Final Retail Price | ₹5,000 | ₹4,250 | ₹3,900 |
| Consumer Savings | — | ₹750 | ₹1,100 |
Realistically, however, state taxes may be adjusted upward, and retail markups may absorb a portion of the savings. Thus, actual savings may shrink to ₹100–₹300 per bottle in many states, say industry insiders.
Industry Reaction: Cheers, But Cautious
The International Spirits and Wines Association of India (ISWAI) welcomed the move, saying it would:
- Promote premiumisation of the Indian spirits market
- Encourage foreign investment
- Support hospitality, tourism, and retail sectors
- Boost state revenues through increased volume
ISWAI CEO Sanjit Padhi called it a “historic moment” that would make premium spirits more accessible to Indian consumers.
However, Vinod Giri, a noted liquor industry expert, pointed out:
“Most taxes on alcohol are at the state level. Even if the full customs duty reduction is passed on, the price drop will be marginal—₹100 to ₹300 per bottle.”
Will This Impact Consumer Behavior?
While the price drop may not be huge, the psychological impact could be significant. A reduced import duty signals to the Indian market that imported liquor is no longer an elite luxury, but something increasingly accessible.
This could drive up demand, especially in:
- Urban middle-class segments
- Duty-free shopping
- Premium hotel and bar chains
Final Take
India’s FTA with the UK may not immediately make Scotch dirt cheap, but it sets the stage for long-term market shifts. As import duties fall and competition increases, brands may introduce smaller packs or better pricing strategies to expand their footprint in India.
So yes, whisky lovers can raise a toast—but the real party may take a few years to begin.
