British liquor company Diageo Plc plans to reduce Scotch whisky prices in India in the higher end of single-digit percentage range as a result of the recently announced India-UK free trade agreement . The global leader in spirits anticipates that the FTA implementation will be completed in fiscal 2027, which will ultimately benefit consumers in the world's largest whiskey market.
The UK-based spirits giant said that once the recently signed India-UK FTA is fully implemented, it will pass on the benefits of lower import duties directly to consumers, benefiting Indian drinkers.
At present, India constitutes the largest whiskey consuming market and is Diageo's largest client by volume and second-largest by value.
Nik Jhangiani, Diageo’s chief financial officer, quoted by ET, said, “This (FTA) will take some time to embed into legislation. I think the belief right now is it will come in fiscal year 2027, but we will keep watching that, so that will start flowing through.”
The impact of FTA on scotch whiskey
Under the terms of the FTA, tariffs on UK-made whisky and gin will be slashed from around 150% to 75% initially, which will further come down to 40% over the next decade. This could lead to a price drop of around 20–22% on some products, although the actual impact will depend on a range of factors including local state taxes and whether companies adjust their pricing strategies accordingly.
Scotch whisky currently holds only 4% of India’s total whisky market, as high import duties have kept it expensive.
Sales of Scotch single malts in India slowed in 2024 as drinkers began turning to Indian-made alternatives, but Diageo hopes the FTA deal will reignite the demand.
World’s biggest whiskey producing company, which makes Johnnie Walker, Tanqueray and Smirnoff, expects a high single-digit drop in consumer prices to trigger a similar jump in volumes.
At present, customs duties account for about a fifth or 20% of the final retail price of Scotch in India, with the rest coming from production costs, marketing, and hefty state taxes.
Industry experts, however, have warned that while the FTA opens the door to new UK whisky brands and offers consumers greater variety, it may not lead to uniform price reductions across states.
“We believe the consumer price of scotch could come down by at least 20-22% but that will largely depend on local taxes and how companies work backwards on their calculations,” ET quoted an industry expert.
As per IWSR or International Whiskey and Spirits Record, on shelf prices could go down by 30%. However, realistically only 10% could be saved on BIO scotch. Several liquor companies are already selling at lower-than-ideal prices to make up for high taxes. Ironically, states are likely to oppose any price cuts because it would mean losing revenue.
“FTA, as far as is presently known, does not remove any of the extensive red tape that characterises doing business in the Indian alcohol market,” said Jason Holway, senior research consultant at IWSR. “Brands and labels will still need to register annually state by state, with licence fees paid. There are opportunities, but they will not necessarily be easier to access.”
The IWSR also highlighted concerns around minimum import pricing and non-tariff barriers. While the risk of predatory pricing or dumping appears low for now, it warned that a price war “can’t be ruled out just yet”, particularly with most players focusing on premiumisation to boost margins.
The industry body said it's still unclear whether two key concerns of the Indian industry have been addressed: setting a minimum import price per case to prevent dumping and predatory pricing, and removing non-tariff barriers to support Indian exports.
"Initial analysis suggests an outbreak of predatory pricing or dumping, which would demand a response from the Indian Customs authorities, is unlikely, particularly when most players, domestic and imported alike, are premiumising portfolios so as to maximise margins. That said, a price war can't be ruled out just yet," it added.
The UK-based spirits giant said that once the recently signed India-UK FTA is fully implemented, it will pass on the benefits of lower import duties directly to consumers, benefiting Indian drinkers.
At present, India constitutes the largest whiskey consuming market and is Diageo's largest client by volume and second-largest by value.
Nik Jhangiani, Diageo’s chief financial officer, quoted by ET, said, “This (FTA) will take some time to embed into legislation. I think the belief right now is it will come in fiscal year 2027, but we will keep watching that, so that will start flowing through.”
The impact of FTA on scotch whiskey
Under the terms of the FTA, tariffs on UK-made whisky and gin will be slashed from around 150% to 75% initially, which will further come down to 40% over the next decade. This could lead to a price drop of around 20–22% on some products, although the actual impact will depend on a range of factors including local state taxes and whether companies adjust their pricing strategies accordingly.
Scotch whisky currently holds only 4% of India’s total whisky market, as high import duties have kept it expensive.
Sales of Scotch single malts in India slowed in 2024 as drinkers began turning to Indian-made alternatives, but Diageo hopes the FTA deal will reignite the demand.
World’s biggest whiskey producing company, which makes Johnnie Walker, Tanqueray and Smirnoff, expects a high single-digit drop in consumer prices to trigger a similar jump in volumes.
At present, customs duties account for about a fifth or 20% of the final retail price of Scotch in India, with the rest coming from production costs, marketing, and hefty state taxes.
Industry experts, however, have warned that while the FTA opens the door to new UK whisky brands and offers consumers greater variety, it may not lead to uniform price reductions across states.
“We believe the consumer price of scotch could come down by at least 20-22% but that will largely depend on local taxes and how companies work backwards on their calculations,” ET quoted an industry expert.
As per IWSR or International Whiskey and Spirits Record, on shelf prices could go down by 30%. However, realistically only 10% could be saved on BIO scotch. Several liquor companies are already selling at lower-than-ideal prices to make up for high taxes. Ironically, states are likely to oppose any price cuts because it would mean losing revenue.
“FTA, as far as is presently known, does not remove any of the extensive red tape that characterises doing business in the Indian alcohol market,” said Jason Holway, senior research consultant at IWSR. “Brands and labels will still need to register annually state by state, with licence fees paid. There are opportunities, but they will not necessarily be easier to access.”
The IWSR also highlighted concerns around minimum import pricing and non-tariff barriers. While the risk of predatory pricing or dumping appears low for now, it warned that a price war “can’t be ruled out just yet”, particularly with most players focusing on premiumisation to boost margins.
The industry body said it's still unclear whether two key concerns of the Indian industry have been addressed: setting a minimum import price per case to prevent dumping and predatory pricing, and removing non-tariff barriers to support Indian exports.
"Initial analysis suggests an outbreak of predatory pricing or dumping, which would demand a response from the Indian Customs authorities, is unlikely, particularly when most players, domestic and imported alike, are premiumising portfolios so as to maximise margins. That said, a price war can't be ruled out just yet," it added.
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