India's trade deal with the UK could make premium whisky more accessible to Indian consumers, but the same tariff cuts could make it harder for the country's young single malt industry to build capacity.
The India-UK free trade agreement, which took effect on Wednesday, immediately halves import duties on Scotch whisky and gin to 75% from 150%, with tariffs set to fall further to 40% over the next decade. The immediate impact is expected to be lower prices for imported spirits, although the benefit to consumers will depend on how much of the duty savings companies and distributors pass on.
For domestic distillers, the trade-off is sharper: cheaper imported Scotch could accelerate premiumization and lower input costs for Indian whisky makers, while intensifying competition for local single malts just as the industry is scaling up.
Lower prices, bigger premium market
India is one of the world's largest whisky markets, with approximately 259 million nine-litre cases sold annually, according to latest available data (2024) from industry body Confederation of Indian Alcoholic Beverage Companies. Whisky accounts for about two-thirds of India's consumer spirits market.
Imported spirits volumes grew at a compound annual rate of 16% between 2019 and 2024, according to international drinks consultancy IWSR. The researcher expects India to become the world's largest Scotch whisky market by 2027, with Scotch volumes forecast to grow 7% annually between 2024 and 2029. Premium-and-above blended Scotch and malt Scotch are expected to grow faster.
Company heads expect retail prices of imported Scotch to fall 7-10% in many states, although the final benefit will depend on state taxes and how much of the savings is passed through the value chain.
Kartik Mohindra, managing director at William Grant & Sons India, which makes Glenfiddich and Grants, said prices are expected to decline 7-10%, with the impact varying across states because of differing excise structures and taxes.
The reduction is unlikely to transform the market overnight, but removes a pricing barrier for first-time buyers and could encourage existing consumers to trade up, he said.
“Pricing was a deterrent. This softens that deterrent a fair bit. What we are hoping is that it will energise the category,” Mohindra said.
The FTA, signed in May after more than three years of negotiations, is India's most significant trade deal with the UK.
The bulk Scotch effect
The bigger industry impact may come from Scotch that consumers never see on a retail shelf.
Bulk Scotch accounts for nearly four-fifths of India's Scotch imports by volume as per ISWAI, and is widely used by Indian liquor makers in premium whisky blends, according to the International Spirits and Wines Association of India (ISWAI). Lower import costs could improve the economics of those blends and support the industry's premiumization push.
Alcohol industry consultant Nita Kapoor said the agreement's biggest impact is likely to be on bulk Scotch rather than imported bottled whisky.
“The real benefit will be for Indian companies that use imported Scotch in blends. Lower input costs can improve product quality and help domestic brands compete better,” Kapoor said, adding that imported bottled brands will continue to face structural challenges because of India's state-wise liquor regulations.
In Maharashtra, retail prices of eligible imported Scotch could fall by 12-13%, ISWAI said. The state is a gateway market for western and southern India, and companies may rationalize prices there sooner, although the final impact will depend on state taxes and pricing decisions by companies and distributors.
ISWAI said the agreement could also expand consumer access to premium imported spirits, where companies pass on the duty savings.
A new threat to Indian single malts
The competitive pressure, however, is likely to be concentrated at the premium end of the market, said Suresh Nair, partner, indirect tax, EY India.
Lower import duties could make premium imported Scotch moderately more affordable and expand consumer choice, while the mass-market whisky segment is unlikely to be affected, Nair said.
“For the broader Indian liquor market, the deal will accelerate premiumization, benefit companies that use bulk Scotch, and increase competition in the premium segment, without causing major disruption to the mass market,” he said.
That is already forcing some domestic distillers to revisit their investment assumptions.
"The UK's whisky industry is over 500 years old and far more evolved, whereas Indian single malts are only beginning to scale," said Sam Mahandru, founder of domestic alcohol manufacturer IndoBevs.
“Imported malt whisky could, in some cases, become cheaper than manufacturing it locally, making planned investments in domestic malt distilleries harder to justify. We are also setting up a malt distillery, and this treaty has forced us to recalculate our projections. That said, competing with the best in the world will push Indian players to raise their game faster, and I firmly believe the Indian malt story will bloom,” he said.
IndoBevs produces, blends, and bottles premium whiskies for India, including Enso, Glen Eden, and Wingman.
Mahandru said lower import duties would be distributed across manufacturers, importers, distributors and retailers, limiting the eventual reduction in shelf prices. While consumers stand to benefit, he said, the tariff cuts could create fresh challenges for India's young single malt industry.
Kapoor said the FTA should be seen as a catalyst rather than an end in itself. While it could intensify competition for domestic players, it also creates an opportunity for spirits companies to strengthen manufacturing, build premium brands and expand exports as the industry becomes more integrated with global markets.
“Karnataka will see the earliest impact of this. Maharashtra could be next, followed by Andhra Pradesh and Delhi. If Uttar Pradesh also considers this, then it is likely to be a national policy,” she said.
Karnataka is the first state to have implemented an excise policy based on alcohol by volume (ABV), and the results have been encouraging, she added.
The deal, in effect, gives India's whisky industry a sharper choice: use cheaper imported Scotch to accelerate premiumization—or invest in building a domestic malt industry that must compete with a much older global rival on more equal terms.