Government Reduces Import Duties, Making Whisky More Affordable

Following the government's decision to reduce import duties to 75%, both Scotch and Indian-made blended whisky are set to become more affordable. This move is expected to significantly benefit Indian blenders and multinational companies, potentially leading to increased premiumisation within the Indian alcoholic beverage sector.

Impact on the Indian Whisky Market

New Delhi: It isn't just your favourite brand of Scotch and British gin that will get more affordable after the govt agreed to halve import duty to 75%, but even made-in-India blended whisky will become cheaper.

Of all the whisky shipped from Scotland, industry estimates suggest nearly 79% comes in bulk form, that is then blended or bottled in India, with the remaining coming in what is called "bottled in origin" in trade parlance. The blending could be 2-3% in a low-end Indian whisky and could be as much as 30% in some of the premium brands, often referred to as Indian-made foreign liquor (IMFL), industry sources said.

Industry Reactions and Future Prospects

"There will be significant savings for Indian blenders as well as the multinational companies which produce IMFL," an industry executive said. The govt earlier planned a steeper duty cut for bulk whisky. Scotch makers couldn't ask for a better deal as the doors are wide open in what is now their largest market by volume. In 2024, India pipped France to once again become the largest export market by volume with 192 million bottles shipped, according to Scotch Whisky Association data.

Naturally, the industry cheered the deal. "It will be transformational for Scotch and Scotland, while powering jobs and investments in both India and the UK. The deal will increase the quality and choice for discerning consumers across India, the world's largest and most exciting whisky market," said Diageo CEO Debra Crew.

Cheaper prices may also result in premiumisation. "India's increasingly aspirational and discerning consumers will now have access to premium international brands at more accessible prices... We anticipate that this will accelerate the ongoing trend of premiumisation within the alcobev sector, positively impacting the exchequer revenues of Indian states," said International Spirits & Wines Association of India CEO Sanjit Padhi.

"We only hope that govt has included a minimum import price to prevent dumping/under-invoicing and removal of non-tariff barriers to ensure better global market access to Indian alcoholic beverages. We fear that if the same template of duty reduction is followed for trade deals with EU, US, and other nations which produce spirits and wines, then Indian alcobev industry, including wine sector, could get adversely impacted," said Confederation of Indian Alcoholic Beverage Companies CEO Anant Iyer.