The UK government has begun talks with India to discuss a free trade deal between the UK and India which could bring enormous benefits for Scotch whisky producers, as the UK Government looks to cut tariffs of up to 150%.
On the 13th of January, the UK and India have begun negotiations on a truly ambitious Free Trade Agreement at an event in New Dehli.
Formal conversations began between International Trade Secretary Anne-Marie Trevelyan and her counterpart, the Indian Minister of Commerce and Industry Piyush Goyal; this trade deal could create huge benefits across the UK.
India is one of the world’s largest and fastest-growing economies, with GDP alone growing at 8.4% in Q2 in 2021. So a powerful new deal such as this would put UK businesses at the front of supplying to India’s rapidly growing middle class and indeed high net worth individuals, as such Scotch whisky set to benefit majorly.
The UK Government aims to slash up to 150% on duties of whisky exports, offering a boost to distilleries and the whole spirits industry as a whole.
Read the full article published on the Government website here:
1,300 jobs to be generated from the trade deal in the UK
A study commissioned by the Scotch Whisky Association assumes that the import tariffs come down to around 25%. With that, it estimates £1.2bn more exports within five years, potentially generating up to 1,300 jobs in the UK.
Scotch whisky accounts for only 2% of India’s market. However, the values of Scotch whisky sales imported to India have risen significantly between 2011 and 2019 from £60m to more than £150m. This is due to the increased growth of India’s economy and rapidly growing middle-class demand for prestige international brands and products.
Last year by volume, India became the world’s third-biggest market for Scotch. Yet 60% of that is in bulk, for bottling purposes or blending with local spirits, which is lower value Scotch than exported to other markets.
Scotch is one of many products which Britain would like to export more of, and the trade deal will also look to discuss other industries such as finance and cars. However, this will involve compromises from both governments.
Mark Kent, Chief Executive of the Scotch Whisky Association, said:
“The new year offers new hope for reducing the longstanding 150% tariff on Scotch Whisky in India.
Launching UK/India trade talks offers a golden opportunity to reach an ambitious tariff reduction in an early harvest deal that could grow Scotch Whisky exports to India by £1 billion over five years. Tackling the tariff and State level regulatory issues would open the market up to smaller producers who are effectively locked out by the substantial barriers to trade.
Improved market access for Scotch would enable an increasing number of Indian consumers to enjoy our premium product. It would also be good for our industry and Indian government tax revenues – a win-win for all.”
UK Government Minister for Scotland Malcolm Offord said:
“Home to 1.4 billion consumers and one of the world’s fastest growing economies, India holds enormous potential for Scottish businesses as part of an ambitious new trade deal.
On a recent visit to Mumbai, I saw first-hand how Scotland’s distilleries would benefit from the removal of tariffs as high as 150% on whisky. Our thriving services sector would also receive a welcome boost.
Prime Minister Boris Johnson said:
“A trade deal with India’s booming economy offers huge benefits for British businesses, workers and consumers. As we take our historic partnership with India to the next level, the UK’s independent trade policy is creating jobs, increasing wages and driving innovation across the country.
The UK has world-class businesses and expertise we can rightly be proud of, from Scotch whisky distillers to financial services and cutting-edge renewable technology. We are seizing the opportunities offered in growing economies of the Indo-Pacific to cement our place on the global stage and deliver jobs and growth at home.”
Following this news, it is an excellent opportunity to begin collecting whisky casks before the
trade deal is formalised, so be sure to get in touch sooner rather than later.