‘Would like tariff elimination on Scotch whisky under India-UK FTA’

With India and the UK concluding the third round of negotiations for a free trade agreement on Friday, Britain’s whisky industry is looking to get a bigger slice of the Indian market. In an interview with Mint, Scotch Whisky association chief executive Mark Kent said according to its estimates, UK’s share in the Indian whisky market to go up from just 2% to nearly 6% when the pact comes into effect. While Kent expects India to reduce import duty on Scotch whisky in phases, he indicated that the UK may not do away with the three-year maturation condition for Indian whiskies to get easier access to British market, which has been a key demand of the domestic alcoholic beverage sector. Edited excerpts: 

Do you see whisky as part of an interim agreement between India and the UK? 

India is the most important consumer of whisky in the world. So, it is important for us to export more whisky to India. There’s a lot of knowledge about Scotch in India and by reducing tariffs it’s going to be a win-win for everyone as it will result in more income for the Indian authorities through higher taxes. We’re engaged in negotiations at the moment, and we have to wait to see how it develops. Certainly, I think everyone is aware of the great potential gains for Scotch in this market and for the Indian whisky industry as well. 

What is the potential to increase Scotch exports to India with the FTA?

Scotch exports to India account for 2% of the whole market, and Indian whisky production is over two and a half times global production of Scotch whisky. So we are not talking about a flooding of the whisky of Scotch we are still talking about relatively small quantities, but as you know, there’s a significant amount of Scotch exported for blending and bottling in India. Increasing the amount of Scotch export will also result in more jobs and investment in India.

What size of the Indian market do you aim to capture from the current 2%?

We’re talking about high- value, premium product. So the volumes are not going to be great, but even if we move to 5-6% of the market, with a phased reduction of tariffs, we think that could lead to an increase of nearly £3.5 billion in revenue to the Indian government, both the Centre and states. So significant quantities of tax collection could be increased.

Do you expect 50% duty reduction from the existing 150%?

We would like elimination of the tariffs. Because that is in everybody’s interest. The description in the UK is exactly the same as in the EU, and that is spirit drink. So somewhere you have to have the word spirit drink, but it doesn’t affect the branding of the product. It’s just that you can’t use that word whisky.

Is there a difference in taxation? 

No, all spirits in the UK are taxed at the same level. So no difference in terms of taxation, no new tariff. It is just the use of that word. Can be sold in the UK by the compulsory category description has to appear on the label.

Do you feel there will be no agreement without the inclusion of scotch whisky?

We would certainly like that to be the case. It is going to be an important part of the pact for both countries. It is a win-win for both consumers. 

What about the entry of Indian whisky in the UK? Do you see the trade barriers for Indian whisky makers also getting resolved under the pact?

Whisky is an export product. About 95% of our production is exported, so we’re very much supportive of free trade. And that goes for the entry of Indian whisky in the UK market. We think there’s potential to do more here in terms of the imports. We’ve already got a lot of Indian whisky coming into the UK. We don’t see any issue of access for Indian spirits. Indian spirits always had access to the UK market. So we look forward to being able to drink more Indian whisky in the UK in the future as well.