Scotch Whisky Likely To Become Cheaper For Indians, As Diageo Plans To Cut Prices Post India-UK FTA

Diageo Plc is preparing to lower the prices of its Scotch whisky brands in India after the India–UK Free Trade Agreement (FTA) introduced a major reduction in import tariffs on British-made spirits. Under the terms of the deal, import duties on whisky and gin from the UK will be halved from 150 per cent to 75 per cent immediately and gradually reduced to 40 per cent over the next decade, according to a report in The Economic Times.

The company, which operates on a July to June financial calendar, will begin implementing price cuts starting with a high single-digit percentage drop. Diageo has confirmed that it intends to fully pass on the benefits of the reduced duties to its consumers.

Scotch May Become More Accessible in Price-Conscious India

India represents Diageo’s highest-volume market and ranks second in value for the company globally. Despite India’s deep affinity for whisky, Scotch currently comprises only 4 per cent of the total whisky consumption in the country due to its elevated cost.

This could soon change. A bottle currently sold at Rs 5,000 might be available for Rs 3,500 to Rs 4,000, depending on state-specific taxes and distributor pricing structures. As such, whiskey prices may drop to Rs 3,500 per bottle, potentially widening Scotch’s consumer base in India. Diageo’s global portfolio includes prominent names like Johnnie Walker, Tanqueray, and Smirnoff, which are expected to benefit from the new tariff structure.

Also read : India's Economy Set To Manage The Impact Of US Tariff Disruptions: Moody's

Boutique Labels Eye Entry Despite Complex State Rules

Alongside major players like Diageo, the reduced import duties may also encourage entry by niche and boutique Scotch producers who were previously priced out of the Indian market. However, while the federal-level duty relief is significant, state-level regulations remain a major hurdle.

India’s alcohol distribution system is governed by state policies that include separate registration requirements for each region, annual licensing fees, and varied distributor margins. Additionally, some states may resist passing on the benefits of the duty cuts due to concerns over losing tax revenue. The report highlighted how some companies are already operating with squeezed margins, and there's concern about how minimum import pricing and aggressive discounting from new entrants could disrupt the market further.

Scotch Imports Hit Record as India Becomes Top Market by Volume

Despite these challenges, the FTA is being viewed as a major breakthrough for international spirits firms aiming to expand in India. In 2024, India overtook France to become the largest Scotch whisky market globally in terms of volume, importing 192 million bottles—an increase from 167 million bottles the previous year.

Though imported single malts have seen a slight decline—partly due to rising interest in Indian-produced malts—the future remains positive for mid-range imported Scotch brands. These labels are particularly well-positioned to gain from the changing pricing landscape, bolstered by increased affordability and wider consumer access.

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