No minimum import duty condition on British alcohol under India-UK FTA: Official

New Delhi: India has not included the MIP (minimum import price) provision for British alcoholic beverages in the free trade agreement between the two countries as demanded by domestic liquor manufacturers, a government official said on Thursday.

The domestic industry has consistently sought a level playing field through the inclusion of an MIP, arguing that it would help curb dumping and under-invoicing by foreign companies.

"There is no MIP for the sector in the trade agreement," the official said.

However, the official said the import duty concessions granted to Scotch whisky under the pact will not significantly impact the domestic market, as the reductions will be implemented gradually over a 10-year period.

"We have followed a pragmatic approach. The duty cut will not hurt Indian industry and consumers, and in fact, it will create jobs in the bottling segment," the official said.

As per the agreement, India will reduce duty on UK whisky and gin from 150 per cent to 75 per cent and further to 40 per cent in the tenth year of the deal.

Both sides announced the conclusion of negotiations for the agreement on May 6. The legal scrubbing of the text is expected to take around three months, followed by about a year for approval by the UK Parliament. The deal will be implemented thereafter on a mutually agreed-upon date.

The official also said that the agreement will help increase exports of Indian alcoholic beverages in the UK, as its demand is increasing.

According to the Scotch Whisky Association (SWA), India has regained its position from France as the world's number one Scotch whisky export market by volume, with 192 million bottles exported in 2024 against 167 million bottles in 2023.

India's alcoholic beverage market is a large and rapidly growing sector. It is the third largest globally and the second largest for spirits. The market is estimated to be worth $52.4 billion, with a projected CAGR of 7.7 per cent from 2025 to 2032.

As regards the Indian whisky market, it is dominated by country-made liquor (88 per cent) and India-made foreign liquor (9.5 per cent).

Scotch whisky constitutes only 2.5 per cent of the total whisky market.

"The tariff reduction on imports of Scotch whisky from the UK is over a longer period of time, and even after that, it will attract significant customs duty. The incremental increase in imports of Scotch whisky, therefore, would not significantly affect the domestic market," the official said.

The official also noted that high duties on imported alcohol have affected the level of FDI (foreign direct investment) in the liquor industry.

"Liberalisation of duties would invite UK's expertise in terms of spirit/wine making, quality control, marketing and consumer awareness," the official said, adding that a reduction of tariffs will also help boost the FDI in the India-made foreign liquor (IMFL) category and Indian producers can take advantage of high technology and better inputs from the UK.

Also, a lower basic customs duty would significantly increase revenue collection, improve tax compliance, eliminate the grey market and counterfeits and drive better quality exports.