BENGALURU: The India-UK Comprehensive Economic and Trade Agreement (CETA), which became operational from July 15, will further bring down the price of premium alcohol brands in Karnataka, which has recently introduced a new excise tax regime based on the content of ‘alcohol in beverage’ (AIB).
The maximum retail price (MRP) on premium Scotch whiskeys and Gin in the state has already been brought down by more than 20% with the inception of the new policy on May 11. Under CETA, customs duties on Scotch whiskey have been reduced from 150% to 75% percent with immediate effect and will be gradually brought down to 40% during the next 10 years.
“Following the implementation of the AIB taxation framework, under which the MRP of imported bottled in origin (BIO) spirits earlier declined by 15% to 23%, product prices have been rationalised to align more closely with those in the neighbouring states. The India–UK FTA is expected to deliver an incremental price reduction of approximately 5% to 7%,” said Sanjit Padhi, the chief executive officer of International Spirits & Wines Association of India (ISWAI).
“However, the timing of any price changes will be subject to the implementation modalities, documentation and the necessary transition period. The full benefits of the India–UK FTA will be realised only if tariff rationalisation is passed onto the consumer and is not offset through additional state taxation or restrictive regulatory measures. It is important that discussions about taxation are guided by complete facts and objective analysis rather than selective interpretation of data,” added Padhi.
The Indian-made foreign liquor (IMFL) industry, while agreeing that reduction in customs duty will bring down the price of premium Scotch whiskey and also help local manufacturers in competing with international brands because of reduced tax on bulk Scotch, said that they will have to withstand the initial drop in Scotch prices.
“With the FTA, the import of bulk Scotch is likely to go up for bottling in India and for incorporating in the IMFL. The Indian distillers, especially the Indian single malt whiskey manufacturers and premium Indian brands will have to withstand the drop in Scotch prices because the price difference between a standard three-year-old blended malt Scotch whiskey with Custom duty of 75% and Indian matured malt spirit will be hardly between Rs 100 and Rs 150 per bulk litre,” said industry sources. Nearly 79% of India’s Scotch whiskey imports comprise bulk Scotch, which is used for blending in IMFL.
The FTA is expected to “The agreement is a strategic opportunity – not merely a tariff milestone – and policy decisions must stay focused on the broader economic dividends for all stakeholders, especially consumers. It delivers three distinct benefits: Greater consumer choice, unlocking access to a wider range of premium global brands, improved access to bulk scotch for domestic producers and modest price relief for consumers,” added Padhi