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What does the India-UK Free Trade Agreement mean for the future of the Scottish whisky industry?

The UK and India’s forthcoming free trade agreement is the “biggest thing to unlock potential in Scotch whisky” and according to The Spirit's Business could boost the sector’s exports to the country by £1 billion (US$1.2bn) over five years and create 1,300 jobs.

As Rishi Sunak takes over as the first Indian-origin prime minister of the UK, the question arises whether his government can settle the issues that had delayed the India-UK free-trade agreement (FTA) in the first place. The deal, which has the potential to double the UK's exports to India, had hit fresh roadblocks during the tenure of the Sunak's predecessor Liz Truss.

Previously, while serving as the Chancellor of the Exchequer, Sunak had expressed his support for the FTA as he saw enormous opportunities for both countries in the deal.

India PM Narendra Modi and UK PM Rishi Sunak.

The UK and India had initially began discussions for a free trade agreement (FTA) in January and it is hoped that a deal will be reached by the end of 2022.

The move could lead to the lifting of a whopping 150% tariff on Scotch whisky in India, a key market for the category.

In 2021, India was the second‐largest export market for Scotch by volume, with 136 million bottles shipped, an increase of 44.3% on the previous year, according to the Scotch Whisky Association (SWA).

“The UK-India trade talks offer a golden opportunity to reach an ambitious tariff reduction that could grow Scotch whisky exports to India by £1bn over five years,” said Scottish Whisky Association chief executive Mark Kent.

Tackling the tariff would open the market up to smaller producers who are effectively locked out by the substantial barriers to trade. It would be good for Scotland, increasing jobs and investment – and the Indian government by increasing tax revenues.”
Higher exports mean higher production – there would be a significant impact into our supply chain too, in Scotland and across the UK, also growing jobs and investment.”

The SWA has further stressed that cutting the tariff would be good news for India too, in light of the fact that much of the Scotch that is shipped to the continent ends up being used in the production of Indian whisky. For this reason, bringing down the tariffs would also support Indian producers, reducing their costs and boosting employment.

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