A landmark free trade agreement between India and the UK has been concluded, aiming to enhance bilateral trade between the two nations. The deal, hailed as “historic” by Indian Prime Minister Narendra Modi and “the biggest and most economically significant bilateral trade deal” by the UK government since Brexit, is expected to have a significant impact on various industries, including the whisky market.
The India-UK Free Trade Agreement is set to strengthen the strategic partnership between the two countries, providing a significant boost to their economies. With the deal expected to come into force within a year, both nations are poised to benefit from increased trade and economic cooperation .
Key Highlights of the Deal
- Tariff Cuts:
- India will cut levies on 90% of British products sold in the country, including whisky, food, and electrical devices. Tariffs on whisky and gin will be halved from 150% to 75%, reducing to 40% within a decade.
- Trade Boost:
- The agreement is expected to increase bilateral trade between the countries by $34 billion a year from 2040, with the UK economy projected to grow by $6.4 billion.
- Whisky Market Impact:
- The reduction in tariffs is likely to boost Scotch whisky exports to India, potentially increasing exports by £1 billion over the next five years and creating 1,200 jobs across the UK.
Industry Reactions
- Scotch Whisky Association:
- The association’s Chief Executive, Mark Kent, welcomed the deal, calling it “transformational” for the industry. He expects the tariff reduction to give discerning consumers in India greater choice of brands and enable more SME Scotch Whisky producers to enter the market.
- Diageo India CEO:
- Hina Nagarajan stated that the FTA would be one of the greatest milestones for market access in the alcoholic beverage industry in decades if the 150% duty levied on imported Scotch whisky is reduced .
Economic Benefits
- UK Economy: The deal is expected to add £4.8 billion to the UK economy and £2.2 billion in wages every year in the long run.
- Job Creation: The agreement is likely to create new opportunities for UK businesses, particularly in the whisky industry, leading to job creation.
- Increased Trade:
- The reduction in tariffs will make UK exports more competitive, increasing trade between the two nations .
