Trade deals with EU and UK give tipplers and trade reasons to be high
By Sourish Bhattacharyya
Alcoholic beverages may not figure among the top ten exports from the 27-nation European Union (EU) to India, but the Free Trade Agreement (FTA) signed on Tuesday, January 27, read along with the India-UK Comprehensive Economic and Trade Agreement (CETA) okayed on July 24, 2025, has raised the spirits of the liquor trade and tipplers in India by several pegs.
The most obvious benefit, according to industry insiders, is the growing access the market will now have to a greater variety of alcobev brands, from whisky, vodka and beer to wines, cognacs and liqueurs, at lower prices. This positivity stems from the significant reduction of tariffs on spirits (from up to 150% down to 40%), wines (150% to 20% on the premium range; medium range, 30%), and beer (110% to 50%).
The India-UK CETA, meanwhile, promises an immediate reduction of the tariff on India's much-loved Scotch whiskies from the present 150% to 75% next year and further down to 40% in another ten years. India is the No. 1 consumer of Scotch whiskies in the world, having toppled France from that position in 2023.
Scotch today accounts for just 3% of India's exploding whisky market, but the Scotch Whisky Association, which has for long being lobbying for tariff reductions, sees India, in the post-CETA world, importing an additional £1 billion worth of Scotch over the next five years. “If that materialises, it won't just shift market dynamics, it could reshape the global Scotch landscape,” says Cask Trade, the official mouthpiece of the Masters of Whisky Appreciation, a group of top-end collectors of cask whiskies.
“A bottle of Johnnie Walker, once sold in India at around £60, could now be found for £40 as a result of the new tariff reductions,” Cask Trade notes optimistically. “Though still expensive compared to locally produced spirits, that reduction will put imported Scotch within reach of tens of millions more consumers.” It is how the world now views the Indian Scotch whisky market.
Significantly, India's Scotch whisky imports, as Cask Trade points out, includes a substantial percentage of the ‘bulk blend' category, which is mixed with local spirits and bottled under blended labels such as 100 Pipers and Royal Stag. It will be cheaper, as a result, to produce premium domestic whiskies, but will the large alcohol companies pass the benefit on to the consumer? That remains to be seen.
Forays by Indian companies into the international Scotch and Irish whisky markets also stand to benefit from the new business environment. It will be interesting to see how the ADS Group's entry into the Irish whiskey market with its brand The Irish Smith, produced in Ireland's Great Northern Distillery by industry veterans John Teeling and Brian Mongan, pans out after the European Parliament adopts the FTA (almost certainly in 2027).
Likewise, Radico Khaitan, which has just announced that it will set up a Scotch whisky subsidiary in Scotland, will stand to benefit from the new tariff regime – it gains access into the European market and at the same time can take advantage of lowered tariffs if and when it decides to export its Scotch whisky from Scotland to India.
India's love for premium international alcohol brands, in tune with the rising aspirations of the country's upwardly (and outwardly) mobile class, is not limited to Scotch. Russian vodka exports to India, for instance, are reported to have experienced a 4x surge in 2025. The domestic industry does see it as a threat, but imported premium wines and spirits at present account for a small (albeit fast-
growing) segment of the alcobev business in the country. Increases in imports, moreover, are not expected to happen overnight and are most likely to be absorbed by a growing market.
India's alcobev exports to the EU are also likely to grow in the new tariff regime. In 2023-24, these included wines (US$1.5 million) and blended whiskies, vodka, brandy and liqueurs (US$64.9 million), compared with imports from the EU to the tune of US$412.4 million (wines) and US$22.3 million (blended whiskies, brandy, gin, tequila, vodka and liqueurs).
Wines are a segment that may play out differently. The India-EU FTA will only impact upper- and mid-range wines, which means slightly more expensive wines are most likely to get cheaper. Will the market, which is at present price-constrained to stick to plonks, trade up or stay within the comfort zone of familiar mass labels? The imported wine market in India is already saddled with unsold stock (some estimates indicate that imported wines piled up in warehouses and ports are the equivalent of what the entire country quaffs in three years!). Importers may just want to first exhaust this stock before they look out for fresh supplies and benefit from the new tariffs. That is the big ‘if' in the new business environment.
There's also the long shadow of the multiplicity of state taxes – state excise duties, VAT, surcharge and ‘additional cess', apart from label registration fees and octroi duty – that are not likely to be reduced, especially because alcohol is the prized lubricant that keeps cash-strapped state governments running. Worse, each state in the country has its own excise law, so state duties can range from 80% in Karnataka to 45% in Haryana. Imported alcohol brands, in fact, will continue to be weighed down by the burden of double taxation.
Still, the retail trade doesn't see any reason not to celebrate. Articulating the sentiments of bar operators and mixologists across India, Yangdup Lama, co-founder of the India Bartender Week and owner of Delhi's acclaimed watering hole, Sidecar, says he is excited at the prospect of presenting an impressive menu to his customers after the tariff reductions kick in from 2027. “Our hands are tied because of the existing high costs of spirits and wines,” says Lama. “Now, I can hope to give my customers an international bar experience here in Delhi.”
An international bar experience, for Lama, doesn't mean just a fatter bar menu with a wider selection of whiskies, vodkas, gins, wines and cognacs, but also more premium ingredients going into the cocktails he stirs and shakes up. “When our bartenders go for international competitions, they are taken aback by the variety of ingredients that their peers abroad have access to,” Lama points out. He envisions a much more evolved bar culture in India, thanks to the FTA and CETA.
An aspect of the drinking experience that is finally getting some attention, especially after credible studies have shown that Gen Z is moving away from alcohol, is the vast non-alcoholic beverages segment. At present, aerated beverages, fruit juices and non-alcoholic beer from the EU are slapped with a 55% import duty, but it has been slashed now to 0%, although the cut in certain instances, especially in the case of non-alcoholic beer, will be phased out over a five-year ‘staging period'.
Aerated beverages and soft drinks coming from Britain now attract 30% import duty. These will also be down to 0%, but in some cases, over a 10-year ‘staging period'. Till then, the duties will range from 15% to 3%. The ‘staging period' seems to be an avoidable irritant, but people in the non-alcoholic beverage business aren't complaining.
Nadia Sood, serial international entrepreneur and co-founder, Bebida Hospitality, whose portfolio includes Copenhagen Sparkling Tea, available in select restaurants and hotels in India, sees hope on the horizon.
“The India-EU FTA will significantly benefit niche and premium brands like Copenhagen Sparkling Tea, which previously attracted outsized import duties,” says Sood. “It is going to be great for Indian consumers who will now be able to enjoy luxury artisanal brands at a more affordable price point.” The good news is that Sood is not alone in her optimism. A sector long bottled up has finally found a reason to pop the bubbly.
(Sourish Bhattacharyya is a noted New Delhi-based food columnist, author and blogger, and a print journalist with more than three decades of experience.)
Disclaimer: These are the personal opinions of the author
