NEWS
UK TARGETS ZERO TARIFF FOR LIQUOR EXPORTS TO INDIA IN FREE TRADE TALKS
By Siulan Law Mathews DipWSET
6-5-2022
Credit: Edward Howell/Unsplash
The United Kingdom is targeting zero tariff privilege for its alcoholic drink exports to India in the on-going talks for a free trade agreement between the two countries.
According to local media reports, the UK industry is hoping to see the tariff coming down by 50 percent in the first year of the deal, 90 percent reduction in the third year, and elimination of tariff in five years.
India is currently levying 150 percent on UK alcoholic drink imports. A tariff reduction will benefit Scotch exporters most since Scotch whiskies account for over 80 percent of India's food and beverage imports from the UK.
If materialised, these terms are better that what Australia has achieved in the early harvest deal with India announced last month in which Australian wines’ tariff will reduce to 25 to 50 percent in 10 years depending on the price of the bottle.
Media reports said the UK and India negotiation teams are aiming at an early harvest deal by Diwali on 24 October this year, to seal agreement on less tricky trade sectors. Both sides will then continue to negotiate for a more comprehensive free trade agreement.
French spirits giant Pernod Ricard, which owns Scotch brands like Chivas Regal, Ballantine's and Glenlivet, has been actively urging India to drop its high tariffs on imported liquors.
Pernod Ricard’s South Asia CEO, Thibault Cuny, recently told Reuters that India’s 150 percent tariff is far higher that most Asian markets and has made certain type of products unaffordable in the India market.
Prices differ across Indian states, but as a comparison the company said a bottle of Chivas Regal costs around INR6,090 (USD80) in southern state of Karnataka, compared with about £28 (USD30) in London.
Asked if the duty should be ditched, Cuny said: "Yes, yes, we should go after zero ... the ultimate objective should be a zero percent."
"Cutting tariffs could more than double UK exports of Scotch in five years,” Cuny predicted.
Pernod Ricard is also the market leader in the bottled-in-India imported bulk whisky segment with popular brands like Royal Stag, Blenders Pride, Imperial Blue and 100 Pipers.
According to IWSR Drinks Market Analysis, India's liquor market is worth USD20 billion, it is set to grow by 7 percent each year, with whiskies and other spirits among the favourites of Indian consumers.
(the writer can be contacted at: info@thewinechronicle.com)
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