Whisky industry toasts trade deal with the largest market in the world

The trade deal is regarded as a major step in the growth of Scotch whisky (Picture: Jeff J Mitchell/Getty Images)

Industry leaders are toasting the predicted growth of Scotch whisky in India - the largest consumer of whisky in the world - after a deal was struck to slash tariffs on imports.

The timeline and detail on the UK-India Free Trade Agreement has now been agreed by Sir Keir Starmer and Prime Minister Nardendra Modi, with the import tariff on Scotch whisky to be cut from 150 per cent to 40 per cent.

The move has huge potential for the growth of Scotland’s national drink in India, which is already the industry’s largest export market by volume, with the equivalent of more than 192 million bottles exported from Scotland in 2024.

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While the volume of Scotch Whisky exports to India have grown by more than 200%, it still only accounts for three per cent of whisky consumed, leaving huge potential for growth in sales.

Mark Kent, Chief Executive of the Scotch Whisky Association said: “The announcement that the UK-India Free Trade Agreement will soon enter into forceis welcome news, given the strategic importance of this landmark deal for the long-term growth of the Scotch Whisky industry in the largest whisky market in the world.

“It will lead to increased investment and jobs in both countries, and we commend the efforts of both governments to bring the FTA into force to realise these benefits. Coupled with the anticipated removal of tariffs in the US, this provides encouragement at a time of headwinds for the industry, as a result of international volatility and challenges domestically.

“We look forward to continuing to work closely with the UK Government on issues such as reform of the excise system to ensure that the industry can fully contribute to the UK's growth agenda."

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Details of the deal come following a challenging spell for the Scotch Whisky industry given weakening demand, partly due to squeezed growth, slower consumer spending, increased costs and changing tastes for alcohol.

The industry was given a boost in April when US President Donald Trump removed tariffs on Scotch whisky imports, which were costing the industry an estimated £4m a week.

With prices of Scotch Whisky significantly more expensive over Indian whiskies given the 150% tariff, many ‘fake’ Scotch whiskies - produced cheaply and traded on the reputation of the premium product - can be found.

The industry has long cited this unfair competition, exacerbated by the “complexity” of exporting whiskies into India, which has left many producers unable to enter the market.

Much of the whisky exported to India is sent in bulk, with most of it used in Indian whisky.

The tariff cut is regarded as a boost to domestic producers in India by reducing the their costs.

Charandeep Singh, chief executive of Scottish Chambers of Commerce, said the details of the FTA, which was formally agreed last June, was an “important step” in strengthening economic ties between Scotland and India, one of the world’s fastest growing economies

He added: “The opportunities available to Scottish firms in the Indian market are significant. During a trade visit to Delhi earlier this year, I saw first-hand the scale of ambition, innovation and economic dynamism across the country, alongside a strong appetite to deepen trade and investment links with Scotland.

“This deal is particularly positive for Scotland’s world-renowned food and drink businesses, with whisky tariffs cut from 150% to 40%.

“However, the potential benefits can extend far beyond a single sector. From technology to energy and professional services, it creates a plethora of new opportunities for Scottish businesses to grow their international exports and presence.”