Domestic Alcohol Industry Raises Concerns Over Market Flooding by Cheaper Imports
New Delhi, May 16 — The Confederation of Indian Alcoholic Beverage Companies (CIABC) has cautioned that any reduction in import duties on wine in upcoming trade agreements could adversely impact domestic wine producers. The industry body urged the government to consider a minimum import price policy to safeguard local interests.
CIABC said that extending concessional tariffs on wines and other spirits from countries such as the European Union, the United States, Australia, and New Zealand might overwhelm the Indian market with inexpensive, lower-quality imported products.
Impact of UK-India FTA on Domestic Whisky
The warning comes in light of the recent India-UK free trade agreement (FTA), under which India agreed to slash duties on Scotch whisky and gin from the current 150 percent to 75 percent initially, and further down to 40 percent by the tenth year of the agreement.
According to CIABC Director General Anant S Iyer, "The duty reduction agreed by India on Scotch whisky under the free trade agreement with the UK may impact the domestic premium category whisky brands due to the likely influx of lower-priced Scotch whiskies."
Existing Wine Duty Concessions and Future Risks
While the India-UK FTA excludes British wines from any import duty concessions and only provides limited relief on UK beer, India has already granted significant duty reductions on wine imports from Australia. Under the India-Australia Economic Cooperation and Trade Agreement (ECTA), which took effect on December 29, 2022, duties on premium imported wine were halved from 150 percent to 75 percent.
CIABC believes that replicating such concessions in future FTAs with major wine-exporting nations could undermine the domestic wine industry, particularly in leading wine-producing states such as Maharashtra and Karnataka.
CIABC’s Recommendations
To counter potential market disruptions, CIABC has proposed the imposition of a minimum import price clause. This, they argue, would help prevent an influx of low-quality and low-cost bottled and bulk wine and spirits into the Indian market.
The industry body remains firm in its stance that while trade liberalisation can bring benefits, it should not come at the cost of compromising the quality and competitiveness of India's domestic alcoholic beverage industry.
