The position was outlined by the Confederation of Indian Alcoholic Beverage Companies (CIABC) in a paper submitted to the department of commerce ahead of the 18-29 July fifth round of free trade talks between India and the UK.

The lobby recommended a reduction in tariffs on Scotch whisky from the current 150% to 100% immediately and to 50% over 10 years, in return for easier entry of Indian whisky into the UK market. British spirit makers want the complete elimination of Indian tariffs on Scotch.

CIABC pressed for a minimum threshold of $5 per 750ml on cost, insurance and freight on UK whisky to qualify for concessions under the proposed FTA. 

In turn, the Indian industry wants the UK to remove conditions related to the three-year minimum maturation period for all liquor, including whisky, exported from India, arguing that India’s hotter climate leads to higher evaporation losses.

Tariff cuts on Scotch are one of the key interest areas for the UK in the agreement, which is likely to be concluded by October-end, around Diwali.

Diwali, when spirit sales tend to zoom, is on 24 October.

“We are all for improving access to each other’s markets. However, we also believe that the deal must open up opportunities for both sides and not be a one-way highway for the UK. It should ensure a level playing field by factoring in fundamental differences in costs and must prevent misuse of concessions by way of dumping cheap products. Hence, we have recommended tariff reduction from 150% to 50% gradually over a 10-year period,” said Vinod Giri, director general, CIABC.

“We have asked the UK to remove non-tariff measure of maturation condition and suggested a threshold price of $5 per bottle below which we believe it is not possible to lawfully import Scotch whisky,” said Giri.

Alcoholic beverages are being discussed in the ongoing round. The paper noted that a “fair tariff rate” must remain in the range of 100-75% in the near term and 75-50% in the long term.

“Any rate below this would create a distorted field in favour of imports where the cost advantages would adversely affect Indian industry,” CIABC said.

Scotch Whisky Association chief executive officer Mark Kent had said in an interview earlier that its members want total elimination of Indian tariffs on Scotch and estimate the UK’s share in the Indian whisky market to go up from the current 2% to nearly 6% once the full benefit of the pact comes into effect.

According to a British High Commission spokesperson, the two sides have provisionally closed 12 out of 26 chapters in four rounds of negotiations.

Indian spirit makers argue that the three-year maturation requirement is a non-tariff barrier used to block whisky exports from India, one of the world’s largest whisky producers, to the UK.

Highlighting that the balance of trade was heavily in favour of the UK, CIABC noted that between 2018 and 2022, 57% of all Indian imports of alcoholic beverages came from the UK, while only 1% of Indian exports of alcoholic beverages went to the UK.

The industry body said it costs 50-75% more to produce a product in India than in Scotland. While capital costs 8-10% in India compared to just 2-3% in Scotland, evaporation losses are 10% every year in India compared to 1-2% in Scotland due to climate conditions.

CIABC, however, opposed any tariff concessions for bulk import of whisky, arguing that two-thirds of the Scotch being imported in bulk is used for just bottling in India without any value addition, and only a third is used in blending with other products.

Amid concerns over a delay in the FTA due to political uncertainty in the UK, the BHC spokesperson said that the target is to complete substantial negotiations on a comprehensive treaty by the end of October.

Commerce secretary B.V.R. Subrahmanyam said last week the UK talks would conclude by August-end, with the agreement ready to be signed by October-end.

Queries emailed to the department of commerce on Monday morning remained unanswered.

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