UK and India agree ‘£1bn’ Scotch whisky trade deal

Britain and India have agreed a long-awaited trade pact which will be a huge boost to the UK’s spirits producers, especially the Scotch whisky industry. The post UK and India agree ‘£1bn’ Scotch whisky trade deal appeared first on The Drinks Business.

May 6, 2025 - 16:31

UK and India agree ‘£1bn’ Scotch whisky trade deal

Britain and India have agreed a long-awaited trade pact which will be a huge boost to the UK’s spirits producers, especially the Scotch whisky industry. Britain and India flags interlocking: Britain and India have agreed a long-awaited trade pact which will be a huge boost to the UK’s spirits producers, especially the Scotch whisky industry.

Hailed as a “landmark” agreement by Prime Minister Sir Kier Starmer, it is claimed that the agreement will boost the British economy by £4.8 billion annually when it comes into effect fully. A central feature is that India’s tariff on scotch and gin will be halved to 75% from the present 150% before falling to 40% by the tenth year of the deal. It is expected that the provisions of the pact will come into force within the next 12 months. Mark Kent, the chief executive of the Scotch Whisky Association, said it was “a once-in-a-generation deal and a landmark moment for Scotch whisky exports to the world’s largest whisky market”. He added: “The reduction of the current 150% tariff on scotch whisky will be transformational for the industry and has the potential to increase scotch whisky exports to India by £1bn over the next five years, creating 1,200 jobs across the UK.” The deal will be a fillip to the sector, which has seen global demand sliding and widespread downtrading by consumers anxious about inflation and the state of global trade.

Diageo uplift

Immediately after the announcement, shares in Diageo, the biggest scotch distiller, jumped by 2.5% before easing to a rise of 1.75% in London. Chief Executive of Diageo, the biggest Scotch distiller, Debra Crew said: “Today’s agreement is a huge achievement by Prime Ministers Modi and Starmer and Ministers Goyal and Reynolds, and all of us at Diageo toast their success. “It will be transformational for Scotch and Scotland, while powering jobs and investment in both India and the UK. The deal will also increase quality and choice for discerning consumers across India, the world’s largest and most exciting whisky market.” UK Trade Secretary Jonathan Reynolds says India is already the world’s fastest-growing economy, and experts predict that within a few years it will be eclipsed by only the US and China.

India's expanding market

With a population of 1.4 billion, India has a market for beverage alcohol estimated at around $52.5 billion, which is projected to expand to $64 billion by 2028. It is driven by a young, expanding middle class, increasing disposable incomes, and evolving lifestyle choices, with imported brands becoming increasingly desirable. It is already the world's largest consumer of whisky and ranks among the top markets globally for rum and brandy. Talks between the two sides have been continuing for at least three years since the end of the Covid pandemic, and came close to agreement under the Sunak government. They were stalled, however, when general elections were called in both countries last year.

Trump tariffs

All eyes are now on Washington for a reaction to the pact. Earlier this year, President Trump and India’s Prime Minister Narendra Modi agreed a deal that saw India lower its tariff of 150% on Bourbon to 100%, giving US distillers an immediate market advantage over their European competitors. Trump has fulminated about discrimination against American products, and he is widely expected to demand at least parity with the terms of the UK’s bilateral deal with India. The European Union has also been seeking a trade pact with India, but so far, nothing has transpired.