Scotch Whisky in India: How long until prices fall after Free Trade Agreement?

Experts say that even if prices do drop, the decrease will be around 8 to 10 percent. This is because the import duty makes up only 15 to 20 percent of the final retail price of Scotch.

New Delhi: Once the free trade agreement between India and the UK is completed, the import tax on Scotch whisky will be cut to half, which is 75 percent. However, the prices of Scotch from brands like Glenlivet, Black Label, Glenmorangie, and Chivas Regal will not drop immediately. These changes will only happen once the agreement is approved by the British Parliament.

How Much Prices To Decrease?

Experts say that even if prices do drop, the decrease will be around 8 to 10 percent. This is because the import duty makes up only 15 to 20 percent of the final retail price of Scotch. The agreement is expected to be passed by the British Parliament by next year. Only then will the import tax be lowered to 75 percent, and in the next ten years, it will be reduced by 40 percent.

Liquor Companies Happy With Deal

Big liquor companies like Diageo are happy with this decision. It has also pleased liquor companies in India that use Scottish spirits to make their own local brands.

Diageo India's MD and CEO, Praveen Someshwar, said, "We appreciate the Indian and British governments for finalizing this deal. It will increase bilateral trade and positively affect the availability of premium Scotch whisky in India, which will support growth and give more choices to Indian consumers."

Sanjit Padhi, CEO of the International Spirits and Wines Association of India (ISWAI), said the deal will create a more balanced and fair business environment than before. This is because there is no duty on liquor exports from India to Britain.

However, people in the industry say that the price drops will not be more than 10 percent. An official mentioned that the share of customs duty in the overall MRP is only about 15 to 20 percent. The rest includes state taxes and distribution margins, so the price drop will be around 8 to 10 percent.

Why Is Scotch Expensive?

So far, a 150 percent tariff has been imposed on the import of scotch in India. But now it will be reduced to half i.e. 75 percent. However, if we look at the 150 percent tariff, the price of one bottle becomes Rs 225. After this, if the VAT and excise duty of the states are added, then the average price of a bottle becomes more than Rs 300. However, the price increases further due to expenses like shipping, logistics, transportation, packaging, handling and margin.