India's Scotch Whisky Dominance: A New Era Begins
India is rapidly advancing toward becoming the world's largest market for Scotch whisky in both value and volume terms within the coming years, according to Mark Kent CMG, Chief Executive of the Scotch Whisky Association. This remarkable growth trajectory stems from intense competition, a noticeable shift toward premium products, and India's robust economic expansion.
India has already surpassed France to reclaim its position as the top global Scotch Whisky export market by volume. The latest SWA data reveals an impressive 192 million bottles shipped to India, though in value terms, the country currently ranks among the top five markets worldwide.
Partnerships with Indian Single Malt Producers
The Scotch Whisky Association is actively pursuing a new era of collaboration with Indian whisky makers, focusing not only on exports to the UK market but also on joint exploration of other global markets. Mark Kent expressed particular admiration for the rising quality of Indian single malt whisky, highlighting its recent success in winning several prestigious international awards.
"There is an opportunity for Indian companies to boost exports of Indian single malt to the UK and forge partnerships for global markets. So, it really is a moment of opportunity to be seized by both sides," Kent told PTI during his recent visit to India.
The SWA chief plans to engage with the Indian Malt Whiskey Association, noting that both organizations share similar perspectives on manufacturing quality and the importance of collaborative efforts. This partnership represents a significant opportunity for both Indian and Scottish whisky industries to expand their global footprint.
India-UK Free Trade Agreement: A Game Changer
The impending Free Trade Agreement between India and the United Kingdom stands as a major catalyst for the projected growth of Scotch whisky in the Indian market. The agreement, currently awaiting ratification, will substantially reduce import duties on UK whisky and gin from the current 150% to 75% initially, with a further reduction to 40% planned for the tenth year of the deal.
Mark Kent, who visited India as part of British Prime Minister Keir Starmer's delegation in October, identified several win-win outcomes from the FTA:
Increased Variety: Indian consumers will gain access to a wider variety of quality Scotch whiskies, particularly from smaller Scottish producers who previously faced significant market entry barriers.
Boost to IMFL: The import of bulk Scotch is expected to increase significantly, with tariffs dropping on bulk whiskey that constitutes 79% of all whiskey exports to India. This will lead to more competitive pricing for Indian manufacturers incorporating Scotch into Indian Made Foreign Liquor.
Investment Growth: The deal is anticipated to stimulate increased investment in both India and Scotland, creating new opportunities across the whisky production and distribution ecosystem.
While the United States currently leads in Scotch whisky imports by value, Kent remains optimistic that India's market growth combined with the more competitive import environment following the FTA will propel India to the top position in value terms as well.
The SWA chief acknowledged that while reduced external tariffs should lower consumer costs and boost sales, the final impact on retail prices will also depend on individual state regulations and tax frameworks across India's complex regulatory landscape.
"It will depend on individual states and their own regulation and their own tax framework, and it will depend on individual companies. It's fair to say that you will see a reduction in the cost to consumers, but that will depend on each individual circumstance," Kent explained.
When questioned about engaging with state governments on regulatory matters, Kent emphasized the importance of finding the right balance: "The trick is finding the right regulatory framework and tax framework, which enables market pricing, which in turn will bring more investment, more trade, and that in turn will bring more excise revenue to the individual states."
Despite global economic uncertainties that could influence market success, Kent expressed confidence in India's sophisticated understanding of Scotch and whisky, noting the country has developed "a very educated knowledge of scotch and whiskey" that positions it well for continued growth and premiumization.
