Scotch Whisky Prices to Drop in India Amid UK-India Trade Deal

Diageo, the global leader in spirits, has announced plans to reduce prices of Scotch whisky in India in the higher single-digit percentage range as a result of the recently signed India-UK free trade agreement. The agreement, which is expected to be fully implemented by fiscal 2027, is anticipated to benefit consumers in the world’s largest whiskey market.

Currently, India is the largest whiskey consuming market and Diageo’s largest client by volume, with the second-largest by value. Nik Jhangiani, Diageo’s chief financial officer, stated that the FTA will take time to be embedded into legislation, with an estimated implementation in fiscal 2027. He added, ‘We will keep watching that, so that will start flowing through.’

Under the terms of the FTA, tariffs on UK-made whisky and gin will be slashed from around 150% to 75% initially, with further reductions 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 various factors including local state taxes and pricing strategies.

Scotch whisky currently holds only 4% of India’s total whisky market due to high import duties that have kept it expensive. Sales of Scotch single malts in India slowed in 2024 as drinkers turned to Indian-made alternatives, but Diageo hopes the FTA will reignite demand. The company expects a high single-digit drop in consumer prices, which could lead to increased volumes.

Currently, 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 warn 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,’ said an industry expert. According to IWSR, on shelf prices could go down by 30%, but 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.

Jason Holway, senior research consultant at IWSR, said, ‘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.’ 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.