India-UK FTA: A market in wait?

By Geetika Sachdev 

The India–UK free trade agreement (FTA) has been a long time coming. For years, it moved in fits and starts as a consequence of political and economic uncertainties. It was finally signed in 2025, paving the way for stronger bilateral ties between the two nations.  

At a broad level, the agreement is meant to ease market access and bring down tariffs across sectors. But in India’s case, trade policy rarely plays out in a linear manner. What gets agreed at the Centre often takes time (and negotiation) to show up on ground. 

That gap is especially visible in the alcobev sector. While other spirits are gradually beginning to pique the interest of consumers, scotch has always occupied a curious position in India. It is widely recognised and considered aspirational, yet there are limitations courtesy of high duties and a complex regulatory structure. 

The FTA was expected to address some of these barriers, particularly on pricing. Nearly a year later, the bigger question is how much of that intent is actually translating into change. 

A market too big to ignore 

India is the largest whisky market in the world by volume. Yet scotch continues to account for only a small fraction of it. In 2024, India imported the equivalent of over 192 million bottles of scotch, making it the category’s largest export market globally by volume. Over the past decade, those volumes have grown by more than 200%, pointing to sustained demand. But that demand hasn’t translated into proportional market share. Scotch still makes up roughly 2–3% of India’s whisky consumption. 

The reasons are structural. A 150% import tariff has long made scotch significantly more expensive than domestically produced whisky. Add to that, a layered system of state excise duties, distribution margins, and regulatory approvals, and the final retail price moves even further out of reach for most consumers. 

“The demand has always been there,” says Major General (Dr) Rajesh Chopra, Director General, Indian Malt Whisky Association, the sole representative body for the Indian malt whisky industry. “The challenge has been access and affordability.” 

That imbalance has also created room for imitation products. Today, there are plenty of whiskies that borrow the visual language or perception of scotch without meeting its production standards. 

The tariff situation  

At the centre of the India–UK FTA is a phased reduction in import duties on British spirits. For Scotch whisky and gin, tariffs are expected to fall from 150% to 75% initially, and then to 40% over a ten-year period. On paper, that is a meaningful shift. 

“The UK–India free trade agreement is a once-in-a-generation deal,” said Mark Kent, Chief Executive of the Scotch Whisky Association, in an official statement last year. “It opens up the world’s largest whisky market.” 

The UK agreement is also not unfolding in isolation. Similar conversations are underway with the European Union, where India is negotiating tariff reductions on wines and spirits as part of a broader trade deal. Taken together, these moves point to a gradual shift in how India is approaching the alco-bev sector in trade negotiations.  

But what looks significant at a policy level doesn’t reflect as clearly at the consumer level. Import duty is only one component of the final retail price. State excise duties, registration fees, warehousing costs, and trade margins continue to make up a substantial portion of what consumers actually pay. “Even with tariff reductions, the retail impact will be limited,” Chopra says. “You’re looking at a correction of maybe 7–8% at best.” 

Currency movements complicate things further. The rupee’s depreciation against the pound has already pushed up import costs over time, offsetting some of the gains from lower duties. 

“Realistically, only a portion of the duty reduction will translate into lower retail prices,” says Mokksh Sani, Founder and Managing Director of Living Liquidz. “The end-consumer benefit will vary significantly across states because pricing is so heavily influenced by local excise structures and distribution margins.” 

“India’s pricing structure, especially import duties layered with state excise and distribution margins, means the benefit will always be diluted by the time it reaches the consumer,” adds Bikramjeet Singh Chadha, Executive Director at Adie BroswonGroup, India’s top producer of grain-based ethyl alcohol, offering premium brands like Master Moments Whisky and Moooz Vodka.  

Policy versus practice 

So far, the biggest gap has been between what the FTA outlines and what has actually changed on the ground. “In practical terms, nothing has shifted yet,” says Vikram Achanta, founder of Tulleeho, a provider of beverage education, training and consulting services in India. “Import duties are where they were, and the approval processes haven’t changed.” 

Sani believes that there haven’t been any immediate tangible changes yet in terms of duties or import processes at an operational level. “The announcements are largely directional, and implementation is contingent on regulatory alignment,” he says.  

Chadha echoes this sentiment. “There is increased engagement across importers and global brands, but no real change yet in duties or route-to-market.” 

The industry response so far has been cautious rather than reactive. Large global players and established importers have started preparing by reviewing portfolios, recalibrating pricing strategies, and strengthening distribution networks. India’s long-term potential is not in question. At the same time, a significant portion of the market remains in a wait-and-watch mode. 

Sani describes it as a “calibrated” approach. “Larger players are strengthening partnerships but a large part of the market is waiting for clarity on timelines and duty structures before making decisive moves,” he highlights.  

Where the first changes may appear 

If tariff reductions begin to reflect in pricing, the first visible changes are likely to show up in the on-trade spaces like bars, hotels, and restaurants, or depending on the state, even retail. 

Here, there is some divergence in industry opinion. Achanta believes on-trade will move faster, given its flexibility. But Sani sees organised retail playing a more immediate role. “Retail pricing tends to reflect changes more directly,” Sani says. “Especially in organised formats, where transparency and competitive positioning drive decisions.” 

On-trade, Sani adds, may take longer to pass on benefits. “Pricing in bars and hotels is influenced by multiple factors beyond input cost. We’ve seen in the past that duty reductions don’t always translate into immediate consumer benefits in these spaces. ”Either way, the shift (when it comes), is unlikely to be uniform.” 

Will Scotch become more accessible? 

One of the key expectations from the FTA is improved accessibility. Whether that happens, and to what extent, remains to be seen. For most consumers, Scotch is likely to remain a premium purchase. But for a segment of urban, upper-income drinkers, even modest price corrections can change consumption patterns. “It’s not about becoming cheap,” Chopra says. “It’s about becoming easier to buy more often.” 

Sani agrees, particularly for the premium and upper mid-segment. “Scotch has traditionally been aspirational because of pricing barriers,” he says. “Duty rationalisation could bring certain variants closer to a wider consumer base, making them more accessible for regular consumption rather than just special occasions.”  

As tariffs ease, competition is expected to intensify across segments. The most immediate impact is likely in the entry-level and mid-premium categories, where price sensitivity is highest. Even small shifts in pricing can influence volume and brand choice. “The biggest shift will likely be in the mid-premium segment,” Sani says. “That’s where consumers are already trading up, and even small corrections can drive higher frequency of purchase.” 

“Entry-level scotch will see the highest growth due to price sensitivity,” Chadha highlights. “Premium and luxury segments will remain largely brand-driven.” Lower entry barriers could also bring more international players into the market, including smaller scotch distilleries that previously found India too expensive to enter. 

At the same time, Indian whisky has evolved significantly. Domestic brands, particularly in the single malt category, have built credibility, both in India and globally. “Imported Scotch may gain incremental share but strong domestic brands will continue to hold their ground,” adds Sani.  

Focus on premiumisation and storytelling 

Beyond pricing, the more important shift may be around premiumisation. India’s spirits market has already been moving in that direction, with consumers increasingly trading up to better quality products and more diverse offerings. 

Greater access to imported brands could accelerate that trend. “It will have a dual impact,” Sani says. “On one hand, it will accelerate premiumisation. On the other, it will expand the base by bringing in more occasional consumers at accessible price points.” That widening of the category, alongside upward movement within it, is what makes the FTA significant beyond just tariffs.  

As competition increases, differentiation will rely as much on narrative as on product. Scotch brings with it a strong sense of heritage and provenance that continues to appeal to Indian consumers. But Indian brands are building their own stories around climate, local ingredients, and a distinctly contemporary identity. “Consumers today are engaging with brands more deeply,” says Achanta. “Storytelling plays a big role in that.” 

A gradual transformation 

Nearly a year after the FTA was signed, the overall picture is still one of potential rather than immediate change. There is clarity on direction—tariffs will come down, access will improve, and competition will increase. But the pace of that change remains uncertain. “There is still a degree of uncertainty around timelines and sequencing,” Sani says. “And for businesses, clarity on execution is as important as the policy itself.” 

What is clear, however, is the direction of travel. “It’s going to be gradual and not dramatic,” says Chopra. 

For now, the industry continues to watch closely—tracking policy movement, preparing for different scenarios, and waiting for the agreement to move from framework to reality. India is already one of the most important whisky markets in the world. The FTA doesn’t change that overnight. But over time, it could reshape how that market is accessed, priced, and experienced. 

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