Raising the bar: India-UK FTA seen driving next wave of premiumisation in alco-bev industry

India's alco-bev industry expects the trade deal with the UK, set to take effect on July 15, to accelerate premiumisation and provide consumers with greater access to higher-quality imported spirits. At the same time, the industry stakeholders say that the government should withdraw the preferential treatment extended to Bottled-in-Origin (BIO) imported products, contending that these concessions create a structural disadvantage for Indian-made products.

Under the free-trade agreement (FTA), India will be reducing duty on UK whisky and gin from 150% to 75% and further to 40% in the tenth year of the deal.

India’s alcoholic beverages (alco-bev) market, valued at $148.3 billion in 2025, is expected to reach $176.2 billion by 2034, exhibiting a compounded annual growth rate of 1.84%, according to IMARC Group.


The Confederation of Indian Alcoholic Beverage Companies (CIABC) said the trade pact is expected to strengthen bilateral trade, investment, and market access across sectors.

“CIABC appreciates that the tariff reduction on imported spirits will be phased over a period of 10 years, allowing the domestic industry time to adjust. Lower import duty on Scotch whisky will also help Indian producers using Scotch as an input for bottled-in-India products. The cost of production is expected to come down marginally and will result in some savings for them. To some extent, it will mitigate the impact of the increased costs on account of the war,” Anant S. Iyer, Director General of CIABC, said.

However, he said, it would be essential to address the state-level policy distortions that currently favour BIO imported products over comparable Indian-made products in several markets.

Explaining further, Iyer said that in several states like Delhi, Haryana, Maharashtra, Madhya Pradesh, Odisha, Assam, and Kerala, BIO products already benefit from lower duties, lower brand registration fees, lower VAT/sales tax, corporation margins, or greater market access flexibility. “Once customs duty reduction takes effect, these state-level concessions could create a double advantage for imported products: first through reduced import duty and second through favourable local excise treatment,” he highlighted.

The industry body clarified that the objective is not to restrict consumer choice but to ensure competitive neutrality between domestically produced IMFL, bottled-in-India products, and BIO imports operating in the same premium segments. “Any policy structure that makes imported products structurally more attractive than Indian-made products weakens the domestic value chain and runs contrary to the spirit of Make in India, Vocal for Local, and Atmanirbhar Bharat,” Iyer said.

India sells over 400 million cases of Indian alcoholic spirits annually, according to the data from the International Spirits and Wines Association of India (ISWAI). Whisky dominates the imported spirits category, with Scotch accounting for around 81% of overall imports of 9.9 million cases.

Experts believe the phased reduction in import duty on Scotch whisky from 150% to 75% under the FTA is expected to improve affordability and enhance the availability of premium imported brands in the Indian market.

Bharati Balaji, Deputy Director General, All India Distillers’ Association (AIDA), said that Scotch is expected to become more affordable as import duties are progressively reduced under the FTA. She, however, mentioned a caveat. “The reduction in customs duty alone may not translate into an equivalent reduction in retail prices. The final consumer price will continue to be influenced by state excise duties, VAT, distribution margins, and other local levies, which vary across states,” she said.

On the bright side, increased availability and more competitive pricing of imported Scotch are expected to intensify competition in the premium spirit segment. “Indian premium whisky brands may face greater competitive pressure, encouraging manufacturers to further invest in product innovation, quality enhancement, and brand differentiation,” Balaji said.

Affirming these views, Sanaya Dahanukar, General Manager - Growth & Innovation, Tilaknagar Industries, said that a more evolved premium market benefits the entire ecosystem, including home-grown brands, by raising consumer appreciation for quality. “For a few of our brands, we expect input costs to come down, which should support our margins. The agreement will also create opportunities for Indian brands looking to expand their global presence, and it will be interesting to see how the upcoming FTAs with markets such as the EU, Peru, Chile, New Zealand, and Australia influence the industry's growth,” she said.

Parth Joshi, Co-Founder, Pour’d Cocktails, said that while most of the debate has fixated on cheaper Scotch, what this agreement really does is speed up the premiumisation of the Indian market and offer Indian premium brands an export route where the numbers actually work.

The bigger shift is that India has always exported bulk spirits while importing brands and ideas. The opportunity now is to export Indian brands, not just Indian alcohol. A craft cocktail made in India, built on flavours, and a story the UK has never tasted can win on the global stage as a world-class product, not an ethnic one,” he emphasised.