Premium Spirits Boom: IMFL Industry Surges as India-UK FTA Slashes UK Whisky Duties

Premium Spirits Boom: IMFL Industry Surges as India-UK FTA Slashes UK Whisky Duties​

Indian Made Foreign Liquor (IMFL) manufacturers are positioning themselves for a substantial growth wave following the ratification of the India-UK Free Trade Agreement (FTA). The deal, set to take effect on July 15, is viewed by industry leaders not merely as a tariff milestone but as a strategic opportunity driving premiumization and revenue growth across the domestic alcobev sector.

Key Benefits of the India-UK FTA for Indian Producers​

The FTA introduces significant tariff rationalisation, promising better access to premium global brands in the Indian market. Customs duties on UK whisky and gin are set to decline from 150 percent upon entry into force down to 75 percent, with a further reduction scheduled over the next decade towards 40 percent.

Sanjit Padhi, Chief Executive Officer of the International Spirits and Wines Association of India (ISWAI), highlighted that the agreement delivers three primary benefits: greater consumer choice, improved access to bulk scotch for domestic producers, and modest price relief for consumers. This outlook underscores a commitment by the sector toward a quality-led and consumer-first vision.

Consumer Price Relief Faces Tax Hurdles​

While the customs duty reduction is highly positive, ISWAI cautioned that the price benefit for consumers will be limited. The industry body noted that the sheer scale of existing taxes, including state excise, VAT, and central customs duties, means any tariff reduction must be passed on completely.

ISWAI calculations indicate that despite the initial fall in customs duties to 75 percent, a three-year blended Scotch might see only a 12 percent price reduction in Maharashtra. Similarly, a 13-year blended Scotch is projected to achieve a 13 percent price drop in the region.

Protecting Margins and Boosting Volume Growth for IMFL Companies​

For Indian companies, the FTA presents an opportunity to secure enhanced margins through improved cost advantages on imported Scotch whisky. This stability is crucial as these domestic players aim to expand their market reach and brand portfolio.

Nikhil Agarwal, founder of All Things Nice, noted that reduced customs duties are a positive development likely to increase consumer interest in premium spirits. The agreement is also anticipated to drive considerable volume growth within the Indian alcobev sector. Luxury segments, which currently contribute nearly 10 percent of the total sector volume, stand to benefit significantly.

Sustaining Market momentum Through Regulatory Clarity​

The full realized benefits of the India-UK FTA hinge on successful tariff rationalisation being fully translated into consumer savings. Sanjit Padhi stressed that these benefits must not be negated by through additional state taxation or restrictive regulatory measures imposed in tandem with the agreement. The immediate focus, however, remains strong protection for domestic players like Radico Khaitan, which had required Scotch whisky valued at Rs 250 crore in FY26.