UK-India FTA: Contesting claims on phasing out duty cuts on Scotch whisky

Import duty reduction for Scotch whisky is being hotly contested between India and the UK, with major differences over the proposed phasing out period for the cuts, as the two countries struggle to expedite the bilateral Free Trade Agreement (FTA) negotiations before the focus shifts to next year’s elections.

Duty cuts on automobiles from the UK and visa liberalisation for Indian workers are two other areas where more last-mile `give and take’ is being negotiated.

“After multiple rounds of negotiations, the two sides have narrowed their differences over the final duty cuts on Scotch whisky. But there is a big difference over the phasing out period. That is where the hitch is,” a source tracking the matter told businessline.

Also read: India-UK FTA ‘very close’ to conclusion but some sectors need more focus, say sources

Phase out period

While India may be ready to consider halving the import duties on Scotch whisky to 75 per cent in the beginning of the first phase itself, as it did in the case of Australian wines, it wants the final cuts to be made over a ten-year period instead of three years proposed by the UK, the source said.

“Both India and the UK seem to be agreeable for an initial reduction in import duties on Scotch to 75 per cent. While the UK has been wanting import duties to be finally reduced to 30 per cent, India could be ready for bringing it down to 50 per cent. So, the difference in positions here is not so stark. However, while the UK wants the phasing down in three years time, India wants it over ten years,” the source said.

India is also trying to push for a substantial Minimum Import Price (MIP) over which the duty cuts would be brought about. Indian alcoholic beverage market is worth $50 billion at consumer prices. In terms of volume, it is approximately 5.4 billion litre of alcoholic beverages.

India became the top buyer of Scotch whisky by volume in 2022, replacing France, according to the Scotch Whisky Association.

Also read: India-UK FTA. UK drives a hard bargain with India for free market access 

“The Indian whisky producing industry, which is growing and gaining a name for itself, needs more time to adjust to duty cuts as so far it has functioned under high protection. That is what the Indian negotiators are trying to convey to their counterparts in the UK,” the source said.

Visa negotiations

In the area of mobility, while India wants a more liberal visa regime for its workers and professionals, the UK is not sharing its enthusiasm. “What the UK is willing to offer so far is some concessions for business visas which, anyway, is not a problem area,” the source added.

Listen: What are the challenges in navigating the India-UK Free Trade Agreement negotiations?

The India-UK negotiations were launched on January 13 2022. So far a total of 12 negotiating rounds have been completed and of the 26 policy chapters, around 19 have been agreed upon.

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