The proposed India-US trade agreement has sparked interest among Indian consumers and producers of whiskey, with the latter expecting minimal disruption to their business. According to industry executives and market data cited in a report by Times of India’s Sidhartha, duty concessions for American whiskey and wine under the proposed agreement are unlikely to significantly impact domestic alcohol makers.
One key reason for this is the expectation that any tariff relief would be accompanied by a minimum import price requirement. This provision, similar to those included in earlier trade agreements with Australia, Europe, and the United Kingdom, would likely keep prices of American whiskey in India high enough to not cannibalize sales of domestic products.
Additionally, current sales volumes of American spirits in India remain extremely small, with total sales of about 2,29,000 nine-litre cases. This tiny market share is dominated by domestic producers, which account for over 99% of the Indian whiskey market. In contrast, Scotch and Irish whiskey command a much larger share of the market, with Scotch accounting for around 3% and Irish whiskey holding under 0.2%.
Industry representatives argue that consumer taste profiles, rather than pricing alone, limit the appeal of American whiskey in India. Most Bourbon and Tennessee whiskies have distinct darkish colors and stronger flavors, which are often perceived as appealing to a more discerning palate. However, this also means that they may not be as accessible to the majority of premium whiskey consumers.
"Bourbon will not make any big impact on the premium whiskey market," said Vinod Giri, director general of the Brewers Association of India. "Pricing is not the main barrier to consumer adoption, as evidenced by the modest performance of bottled-in-India Jim Beam that retails at an affordable price below locally bottled Scotch whiskey."
The government officials have indicated that domestic interests will be protected under the bilateral trade pact. However, the industry is still awaiting finer details of the agreement.
Policy Safeguards
CIABC believes that the bilateral trade deal will be equitable and mutually beneficial for both countries. While not opposed to a reduction in import duty, CIABC wants it to happen in a phased manner.
In the wine segment too, imported labels occupy a narrow slice of the broader alcohol market. Wine accounts for less than 0.5% of total alcohol consumption in India, with Australian varieties currently holding the largest share among imports.
Consumer Preferences
The limited scale of imports and evolving consumer preferences suggest that tariff relief for US spirits may do little to alter the balance of India’s vast and domestically led alcohol market.
"Success in the Indian wine market, especially imported wines, is driven not just by provenance, but by ability to distribute effectively," Giri added.
Not Confirmed:
* Exact terms of the minimum import price requirement
* Details on how the bilateral trade pact will specifically benefit domestic producers
* Timeline for the implementation of tariff relief
