India could overtake the United States to become the world’s largest Scotch whisky market by value as demand for premium spirits grows and import duties fall under the India-UK free trade agreement (FTA). But while the tariff reduction could make imported Scotch more competitive, Indian consumers may not see an equivalent drop in retail prices.

The trade agreement, which came into force on July 15, reduced customs duties on Scotch whisky from 150% to 75%. The duty is scheduled to decline further to 40% over the next 10 years, opening the door to changes in pricing, distribution and competition across India’s premium spirits market.

The key question is how much of the duty reduction will reach consumers. State-level taxes, distribution expenses and retailer margins will continue to influence the final price of a bottle.

The changes also come at a time when Indian whisky makers are seeking a more level playing field as imported Scotch becomes more competitive.

India’s Scotch Whisky Market Is Getting Bigger

India already leads the world in Scotch whisky consumption by volume, but it ranked third by export value in 2025, behind the United States and France.

Scotch whisky exports to India were valued at £286 million, equivalent to approximately Rs 3,614 crore, in 2025, according to the Scotch Whisky Association (SWA).

The country’s potential to move to the top of the market by value reflects the opportunity presented by growing demand for premium spirits. As consumers explore higher-priced products, the lower import duty could make some Scotch labels more accessible and encourage competition across different price segments.

However, becoming the largest market by value will depend on how demand develops and how consumers respond to changes in pricing. Lower customs duties may help, but they do not automatically translate into proportionate retail price cuts.

Why Indian Whisky Makers Want Tax Parity

The Confederation of Indian Alcoholic Beverage Companies (CIABC) has welcomed the opportunities associated with premiumisation while calling for changes to domestic taxation policies.

Indian spirits producers have been investing in distillation, maturation, quality and brand building. The industry body argues that these efforts should receive fair treatment as imported Scotch gains a cost advantage from lower customs duties.

“Trade liberalisation and Make in India should reinforce each other. There should be parity in taxation,” CIABC told NDTV.

Its concern centres on differences in state-level taxes and levies imposed on comparable Indian-made products. According to the industry body, lower customs duties on imported Scotch could widen the competitive gap unless state governments review their tax structures.

CIABC has called for rationalisation of taxes, fees and margins that it believes disadvantage domestic products. It has also warned that a shift towards imported spirits could affect the market share of premium and above-premium Indian-made foreign liquor (IMFL) brands, with potential implications for state revenues.

The industry body has urged authorities to monitor import prices and volumes for evidence of dumping or unfair pricing practices. It has emphasised that any action should be based on evidence.

Cheaper Scotch Could Also Benefit Indian Manufacturers

The impact of the tariff reduction is not entirely negative for domestic producers.

Imported whisky is used in premium blends, creating opportunities for Indian companies involved in blending, bottling and packaging. More competitive import prices could help businesses that use Scotch as an ingredient in their products.

However, CIABC has raised concerns about some Scotch products previously bottled in India shifting to bottled-in-origin (BIO) imports, which the industry body says can benefit from lower state levies. It has identified Maharashtra among the markets where it says this trend is emerging.

This creates a more complicated picture for Indian manufacturers. Lower import duties could support certain domestic operations while increasing competition for locally produced premium spirits.

The challenge for policymakers is to balance greater access to imported products with conditions that allow Indian manufacturers to invest, expand and compete.

Will Scotch Whisky Prices Fall in India?

Consumers could benefit from the duty reduction, but the extent of the savings will vary.

Abhishek Modi, managing director of Modi Illva and a CIABC board member, told NDTV that lower duties would improve Scotch’s accessibility, although the full benefit was unlikely to reach buyers.

State taxes, distribution costs and retailer margins will continue to affect retail prices. Consequently, the reduction in customs duty should not be confused with an equal percentage reduction in the price displayed on a shop shelf.

Scotch prices have already fallen in some Indian markets following the implementation of the trade agreement, although the reductions differ by brand and state.

This variation matters because alcohol taxation and pricing structures are not uniform across India. A brand could become more affordable in one market without recording the same reduction elsewhere.

Modi expects the change to bring gradual shifts in price positioning, wider consumer choice and greater competition rather than an immediate, uniform price cut across the category.

For buyers, this could mean better access to selected imported labels and more options in the premium segment. It does not guarantee that every Scotch brand will become substantially cheaper.

Indian Whisky Brands Face Pressure to Stand Out

The narrowing price gap between imported Scotch and Indian premium whisky could also change how domestic brands compete.

Mokksh Sani, founder of Living Liquidz and co-founder of Cartel Bros, said India’s potential to become the world’s largest Scotch whisky market by value reflects the growing sophistication of its premium spirits segment.

He expects lower import duties to improve price accessibility and encourage consumers to explore premium whisky. However, he sees consumer education, distribution and a greater appreciation of quality and craftsmanship as important parts of the category’s expansion.

For Indian whisky makers, competing on price alone may not be enough. Product development, flavour profiles, maturation, production methods and brand identity could become increasingly important as consumers gain more choices.

Sani said the next stage of growth would be less about pricing and more about building distinct products.

That shift could encourage Indian brands to communicate their differences more clearly while investing in quality and innovation. At the same time, greater competition from imported Scotch may require manufacturers to reassess their pricing, sourcing and distribution strategies.

What the India-UK Trade Deal Means for Whisky Buyers

The reduction in Scotch whisky import duties creates an opportunity for India’s premium spirits market, but the benefits will depend on how businesses and state governments respond.

The customs duty has already fallen from 150% to 75%, with a further reduction to 40% scheduled over the next decade. The eventual impact on consumers will depend on how these savings interact with state taxes, distribution expenses and commercial margins.

Indian manufacturers, meanwhile, want the benefits of international trade to coexist with fair taxation and support for domestic production.

For consumers, the most immediate takeaway is that some Scotch labels may become more affordable, but a broad-based price drop cannot be assumed. The larger change could be a more competitive premium whisky market, with imported brands gaining access to a wider audience and Indian producers facing greater pressure to distinguish their products.

India’s rise in the global Scotch market will therefore be measured not only by the value of imports, but also by how the industry manages pricing, consumer choice and competition between international and domestic brands.

Also Read: Nollywood actor Francis Duru dies after brief illness, family confirms