India is poised to surpass the United States as the largest market for Scotch whisky by value, driven by reduced import duties and an increasing appetite for premium spirits, as indicated by the Scotch Whisky Association (SWA). The India-UK free trade agreement (FTA), effective from July 15, has significantly decreased customs duties on Scotch whisky from 150 per cent to 75 per cent, with plans for further reductions to 40 per cent over the next decade. This shift is expected to enhance the accessibility of imported Scotch for Indian consumers.

The anticipated changes in duty structure could intensify competition within the premium whisky segment. Scotch whisky exports to India were valued at 286 million British Pound Sterling, approximately Rs 3,614 crore, in 2025. While India currently holds the title of the largest market for Scotch by volume, it ranks third in terms of export value, trailing behind the US and France.

The next phase of growth in this sector may hinge on how rapidly Indian consumers gravitate towards premium products and how domestic manufacturers adapt to the evolving competitive environment.

Indian Whisky Makers Seek Fair Competition

The Confederation of Indian Alcoholic Beverage Companies (CIABC) has highlighted that the trend of premiumisation in India is creating significant opportunities for local spirits. Domestic producers are investing in distillation, maturation, and brand development, gaining recognition on the international stage. However, the CIABC has called for reforms in domestic policies to ensure that Indian premium spirits can compete on an equal footing with imported ones.

CIABC’s immediate concern revolves around the higher tax burden faced by Indian-made products at the state level. The organisation has warned that the reduction in customs duties for Scotch imports could exacerbate this disadvantage unless state tax structures are reassessed. It has urged state governments to rationalise taxes and fees that currently discriminate against Indian products.

Furthermore, the CIABC has cautioned that a shift towards lower-taxed imported spirits could diminish the market share of Indian-made foreign liquor (IMFL) premium brands, potentially impacting state revenues. The body has also called for vigilant monitoring of import prices and volumes to prevent dumping and unfair pricing practices.

Will Scotch Become Cheaper For Indian Consumers?

Despite the reduction in import duties, it is uncertain whether consumers will experience a corresponding decrease in retail prices. Abhishek Modi, Managing Director of Modi Illva and a board member of CIABC, stated that while lower duties may enhance accessibility, the full benefits are unlikely to be passed on to consumers due to state taxes, distribution costs, and retailer margins.

Some initial price reductions for Scotch have been observed in various Indian markets following the trade deal, but these changes vary by brand and state. The ultimate impact on consumers may lead to some imported labels becoming more affordable, encouraging those who typically purchase mid-range whisky to explore premium options.

Modi emphasised that the disparity in state-level tax structures remains a concern, as imported Scotch benefits from reduced customs duties while domestic manufacturers face inconsistent state taxation. Companies will need to make strategic decisions regarding local bottling and distribution as demand evolves.

Indian Whisky Brands Face A New Challenge

The evolving price dynamics may compel Indian whisky producers to reassess their competitive strategies against imported Scotch. Mokksh Sani, founder of Living Liquidz, noted that India’s potential to become the largest Scotch market by value reflects the growing sophistication in its premium spirits segment. He anticipates that the duty reductions will enhance price accessibility and encourage consumers to explore premium whisky.

However, Sani pointed out that the real opportunity lies in expanding the category through consumer education and appreciation of quality. As the price gap narrows, Indian brands must focus on quality and innovation to establish a distinct identity in a market with increasing choices.

Ultimately, the tariff reductions could reshape competition, encouraging more consumers to try Scotch while prompting Indian producers to invest in quality and product development, thereby fostering a more robust market environment.

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