India-UK FTA: Domestic AlcoBev industry wary over duty cuts, foreign players rejoice

New Delhi: The domestic alcohol beverage (AlcoBev) industry has raised concerns over the sharp cut in import duties on British whiskies and gin under the India-UK trade deal, saying that the government did not fully heed to its advice which may adversely impact the industry.

India and the UK on Tuesday sealed a landmark free trade deal, under which the Whisky and gin tariff will be halved from the current 150 per cent to 75 per cent before bringing it to 40 per cent by the end of the 10th year of the deal.

Commenting on the development, the Confederation of Indian Alcoholic Beverages Company (CIABC) said: "Though FTA details are still awaited, from what information we have gathered it seems that the Government has not fully heeded to the pleas of the Indian alcoholic beverage industry.

The domestic alchoBev industry, which was seeking a level-playing field for the Indian players, said it now hopes that the FTA has included MIP (minimum import price) which will prevent dumping / under-invoicing by foreign companies and also the removal of non-tariff barriers to ensure better international market access to Indian alcoholic beverages.

The CIABC, which represents the domestic AlcoBev players, expressed fear that if a similar structure is followed by the government in its ongoing trade negotiations with the US and other countries, then it could adversely impact the local industry.

"We fear that if the same template of duty reduction is followed for the trade deals with the EU, the US and other nations which produce spirits and wines, then the Indian Alcobev industry, including the wine sector, could get adversely impacted," said CIABC Director General A S Iyer.

However, ISWAI (International Spirits and Wines Association of India), which represents foreign liquor companies welcomed it saying it is a win-win situation for the countries as it will provide a “significant strategic benefit “ and also attract investments.

ISWAI termed the UK-India Free Trade Agreement as a landmark development for the AlcoBev sector.

ISWAI members include global players such as Bacardi, Brown Forman, Campari Group, Diageo-United Spirits, John Distilleries, Moet Hennessy, Pernod Ricard, Suntory Global and William Grant & Sons.

“The reduction in tariffs offers significant strategic benefits for both countries. India’s increasingly aspirational and discerning consumers will now have access to premium international brands at more accessible prices,” said ISWAI CEO Sanjit Padhi.

It also anticipates that the FTA will further accelerate the ongoing trend of premiumisation within the AlcoBev sector, positively impacting the exchequer revenues of Indian states, said ISWAI.

“We see this agreement as a win-win for all stakeholders in the spirits sector whilst fueling trade, attracting investment, and fostering the exchange of best practices,” said Padhi.

United Spirits Managing Director & Chief Executive Officer Praveen Someshwar said, "The landmark treaty will enable improved accessibility and choice of scotch for the Indian consumers, the largest and most exciting whisky market.” USL is now owned by British multinational alcoholic beverage company Diageo, which owns brands such as Johnnie Walker, Crown Royal, Smirnoff, Baileys, and Guinness.

However, CIABC said that the government's target of USD 1 billion in exports from the Indian Alcobev industry by 2030 will be difficult to achieve without ensuring proper market access especially to the UK/ EU/ Australia etc.

"While the other sectors would be benefitting from the FTA, the Indian Alcobev industry is also seeking similar benefits. Though Indian whiskies, rum and gins have been winning accolades globally, without removal of non-tariff barriers and granting of market access it will be difficult for the Indian Alcobev sector to meet the export target,” it said.

CIABC has also urged the states such as Maharashtra, Kerala, Odisha, Rajasthan, Madhya Pradesh etc which give excise concessions to imported liquor, they should now review these concessions and make them equal to that of IMFL / Indian wines.

As per the estimates, the Indian alchoBev industry contributes over Rs 3 lakh crore to state revenues, employs over 20 lakh people, and sustains the livelihoods of over 50 lakh farmers in India.