New Delhi: Industry bodies representing alcoholic beverage makers on Wednesday welcomed the implementation of the India-UK Free Trade Agreement (FTA), saying it would boost bilateral trade, support premiumisation of the domestic market and strengthen the spirits value chain, even as domestic manufacturers sought withdrawal of concessions enjoyed by imported liquor brands in some states.
The Confederation of Indian Alcoholic Beverage Companies (CIABC) said the landmark pact would further strengthen economic ties between India and the UK across sectors and lead to higher bilateral trade and investment.
Also read: UK-India free trade deal to kick in on July 15, cutting tariffs by over $480 mn in year one
However, CIABC, which represents IMFL players, urged state governments to withdraw concessions such as lower brand registration fees and reduced excise duties extended to bottled-in-origin (BIO) brands, arguing that such incentives have made imported alcoholic beverages cheaper than products manufactured in India.
"With import duties being cut drastically, it is high time that state governments end all concessions currently extended to BIO brands. This has created a situation where importing alcobev products is becoming cheaper than producing them in India," said CIABC Director General Anant S Iyer Meanwhile, the International Spirits and Wines Association of India (ISWAI), which represents leading premium alcoholic beverage companies (mostly MNCs), said the pact will strengthen bilateral trade, support industry growth and create new opportunities for the country's alcoholic beverages sector.
ISWAI said the reduction in tariffs on Scotch whisky imports from the UK, including bulk Scotch used for bottling and blending in India, is expected to generate value across the spirits value chain while widening consumer choice.
"The coming into force of the agreement and the resulting tariff reductions offer significant strategic benefits for both countries," ISWAI CEO Sanjit Padhi said.
According to Padhi, the agreement will enable India's increasingly aspirational consumers to access premium international brands at more affordable prices, while also supporting growth in related sectors such as tourism, hospitality and retail.
The commerce ministry on Wednesday said the India-UK FTA will come into force on July 15 this year. The Comprehensive Economic and Trade Agreement (CETA) was inked on July 24 last year.
As per the FTA signed in London between the two governments, India is reducing duty on UK whisky and gin from 150 per cent to 75 per cent and further to 40 per cent in the tenth year of the deal.
According to ISWAI, India sells over 400 million cases of Indian alcoholic spirits annually, while imported spirits account for only about 2.5 per cent of the total market. Whisky dominates the imported spirits category, with Scotch accounting for around 81 per cent of overall imports of 9.9 million cases.
The association noted that nearly 79 per cent of Scotch imported into India is in bulk form and is used by Indian Made Foreign Liquor (IMFL) manufacturers for bottling and blending operations.
Also read: 'We did it': Modi, Starmer caught on mic hinting at breakthrough in UK-India trade deal
It said tariff rationalisation would help relevant IMFL manufacturers improve the quality of their India-made products, enhance global competitiveness and support exports.
The FTA, ISWAI added, reflects the commitment of both India and the UK to deepen economic ties while ensuring a calibrated approach that balances market access with the interests of domestic industry.
Abneesh Roy from Nuvama Institutional Equities said "It has been long-awaited and hence a positive, which will lead to improvement of margins and volumes." It will have twin benefits RM cost of scotch gets cheaper, and the end product, if imported, can also be made more affordable, driving volume scale-up.
