Home / News / India /  UK seeks duty cut on Scotch whisky

NEW DELHI : The UK hopes India will sharply cut its 150% basic customs duty on scotch whisky under a free-trade agreement (FTA) that is in the works.

The move would widely open up Britain’s third-largest exports market for scotch whisky by volume after France and the US. It would also fulfil a long-standing demand of the Scotch Whisky Association (SWA), the trade body representing scotch producers, for improved access to the lucrative Indian market.

A trade report, titled Global Britain Local Jobs, released on Wednesday by Elizabeth Truss, secretary of state for international trade, said post-Brexit, the UK with control of its trade policy has an opportune moment to foster trade with high-growth emerging markets like India.

Tariff hurdle
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Tariff hurdle

Both countries are now engaged in deepening their trade ties through an “Enhanced Trade Partnership" as part of the development of a road map that would lead to a potential comprehensive FTA. In a joint statement during the five-day visit of Truss to India in February, both sides agreed to formally launch the partnership during the visit of British Prime Minister Boris Johnson to New Delhi later this year.

The UK has been scouting for trade partners after Brexit and is likely to prioritize trade deals with the US, Australia and New Zealand but is also keen to engage with fast-growing emerging markets like India.

“Now is an opportune moment for ‘Global Britain’ to foster trade with high-growth emerging markets. Emerging markets are forecast to dominate the world’s top 10 economies in 2050, with India in second place, Indonesia in fourth, Brazil in fifth and Mexico in seventh place. These are the great economies of tomorrow that will be key trading partners for the UK to embrace," according to the report.

Holding that British businesses still face significant tariffs when selling their goods overseas, the report said scotch whisky is subject to a tariff of 150% when entering India and 60% in Thailand. “Tariffs like these amount to a tax on free trade with some of the UK’s partners," it added.

According to SWA, scotch whisky makes up just 1% of India’s 300 million-case market for spirits, which it said is partly due to the 150% import tariff as well as various regulations across states.

Reducing import tariffs would be a relief to scotch producers following a 23% drop in exports by value in 2020 to £3.8 billion, the lowest in a decade, due to the impact of covid and a 25% tariff imposed by the US. The number of 700ml bottles exported dropped by 13% last year to the equivalent of £1.14 billion, according to SWA.

According to the report, Britain should consider striking ground-breaking deals with India, countries across the Gulf and the Mercosur bloc in Latin America, which will be the largest markets of the future. “We are excited by the prospect of new free trade deals between the UK and some of the fastest-growing economies. By unlocking market access challenges for export powerhouses like the Scotch industry, eliminating high tariffs like India’s 150% basic customs duty, will boost exports, generate investment and support jobs across the UK," Dan Mobley, global corporate relations director, Diageo, was cited as saying in the report.

Commerce and industry minister Piyush Goyal said last September that India is open to importing scotch whisky from UK in a “larger measure" to put an end to spurious liquor being sold in India in the name of scotch whisky.

A query sent to the commerce ministry did not elicit a response.

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