\n<\/p>\n
You can hardly blame the Scotch whisky industry for all the kerfuffle surrounding the announcement of the India-UK free trade agreement (FTA), and specifically the halving of import tariffs from 150% to 75%, with a further cut to 40% within the next decade.<\/p>\n
One article talked of the FTA idea having been floated around \u201csince the premiership of Boris Johnson\u201d. Well, it\u2019s true that there was some excited (but premature) chatter of a deal at the time \u2013 largely, I\u2019d argue, to distract attention from the shambles of Brexit \u2013 but I reckon I first wrote about the prospects of tariff cuts for Scotch in India at least 20 years ago. So it\u2019s taken a while.<\/p>\n
Scotch Whisky Association (SWA) chief executive Mark Kent labelled the deal \u201ctransformational\u201d, repeating the organisation’s projections that it has the potential to increase Scotch whisky exports to India by \u00a31bn ($1.34bn) over the next five years, creating 1,200 jobs in the UK.<\/p>\n
Kent also suggested the move would give \u201cdiscerning consumers in a highly educated whisky market far greater choice from SME Scotch whisky producers, who will now have the opportunity to enter the market\u201d.<\/p>\n
I haven\u2019t seen the SWA\u2019s workings and I\u2019ve no reason to doubt the good faith of those figures but meeting that value forecast entails increasing shipments fivefold versus the total of just under \u00a3250m recorded in 2024 (HMRC data). For a trade organisation often characterised as conservative and cautious, that\u2019s pretty bullish.<\/p>\n
As for SME Scotch whisky producers, I\u2019m sure that many of them will want to enter India and I\u2019m equally sure that they\u2019re under no illusion about the challenges they face. India is a huge and incredibly complex market in which to operate \u2013 and that doesn\u2019t change just because the tariffs have been halved.<\/p>\n
Even Indian brand owners complain about tax levels and the \u201cbureaucratic hurdles\u201d that they say sometimes make it easier for an international brand to establish itself than one made in a neighbouring state. Many have tried \u2013 and failed \u2013 to push up retail sales prices to counteract rising costs.<\/p>\n
India can be chaotic. Just look at Delhi: in November 2021, the city privatised its previously state-owned liquor retail network, aiming to eliminate corruption and open up investment in the ramshackle network of stores in the city. Within months, the shiny new system was in pieces, corruption had if anything worsened and a race to the bottom on pricing was driving stores out of business.<\/p>\n
\nThe tariff cut is also good news for Indian companies<\/p>\n<\/blockquote>\n
By July 2022, the city had reverted to the old model but the reverberations continue: Pernod Ricard is still locked out of the market<\/a>, refused a licence because of allegations that it broke the rules governing relationships with retailers during the brief privatisation experiment (allegations which the company strongly denies).<\/p>\n<\/p><\/div>\n