While American whiskey makers welcomed the US decision to reduce import duties on Bourbon, Indian liquor producers are pushing for stricter measures to prevent the dumping of imported spirits and advocating for better global market access for Indian alcoholic products, which currently face various non-tariff barriers.
On Friday, India reduced tariffs on bourbon whiskey from 150 per cent to 100 per cent, a move likely to boost imports of US brands, following US President Trump’s criticism of the “unfair” duties in the South Asian market.
US-based bourbon players like Varchas Whiskies, crafted by Shankar Distillers in Troy, Michigan, applauded this US-India agreement resulting in the tariff reduction in India.
Tariffs reduction
“The tariffs reduction opens doors for American whiskey brands, including Varchas Whiskey, to expand their presence in India, the world’s largest whiskey market by volume. This move is expected to make premium American Bourbon more accessible to Indian consumers while boosting trade and economic opportunities for both countries. This is a historic moment for the American whiskey industry and a game-changer for brands like ours looking to establish a stronger footprint in India,” said Varchasvi Shankar, Founder of Varchas Whiskey.
In 2024, India was the 23rd largest export market for American whiskeys, with exports totaling $8.8 million. Despite India’s expansive whiskey consumption, American whiskey exports remained relatively low due to the high import duties. With the tariff reduction, the industry anticipates an uptick in demand, leading to greater market penetration for brands like Varchas Whiskey, he added.
Sanjit Padhi, CEO of the International Spirits and Wines Association of India (ISWAI ) said that the reduced Agricultural Infrastructure and Development Cess (AIDC) on Bourbon Whiskey is a step forward to making international brands accessible to consumers.
“We are hopeful this is a harbinger of tariff reduction for all international brands being imported to India and expect similar cuts to AIDC soon for all categories shortly.”
Seeking a level playing field
However, Indian liquor manufacturers expressed concerns about this move. The Confederation of Indian Alcoholic Beverage Companies (CIABC) said that while Indian manufacturers were not against reduction in import duty, they sought the import duty cuts in a phased manner.
The CIABC urged the Government to address the concerns of these companies and ensure a level playing field in the free trade agreement (FTA) negotiations. It also called for effective measures to curb the dumping of imported spirits and seek better international access to Indian alcoholic products which face several non-tariff restrictions at present.
“The Government needs to safeguard the interests of Indian liquor manufacturers while deciding on issues related to customs duty cuts (BCD+AIDC) and other concessions under FTAs. Though we have already recommended cutting basic customs duty on spirits over 10 years, we also want to ensure better international market access, especially in Western countries, and safeguard the interests of Indian companies against any dumping of products through a transfer price mechanism at lower prices specifically for India,” said Anant S Iyer, DG, CIABC.
The body also requested State governments to withdraw all excise concessions given to imported liquor since cuts in customs duties may further hit the Indian spirits and wine categories.
“It will be a double whammy for the Indian companies,” he added.
The CIABC also requested the government to ensure better market access for Indian products in foreign markets. “Countries should remove non-tariff barriers preventing the majority of Indian products from being sold in the Western countries. We also want these markets to recognise Indian whiskies at par with other global products.”
He continued that the beverage alcohol industry contributes over ₹3 lakh crore to the exchequers of State governments apart from revenue accruing to the Centre from Customs duty and GST on a host of inputs.