British Scotch whisky producers celebrate boosted exports to India with recently finalized trade agreement
Unleashing Scotch's Indian Adventure: A New Era of Spirits Trade
Nishant Sharma, who hails from Punjab in India and now resides in Glasgow, is seizing the opportunity presented by the recent UK-India trade deal. This groundbreaking agreement marks the beginning of significant export expansion for his spirits company, Rutland Square. Established in the heart of Edinburgh, the business is named after India's consulate's location in the city.
Sharma, who has been infusing gin with Assam tea to craft a cross-border narrative, hopes his spirits could find a place in India's growing middle classes by leveraging the increased demand for prestige Scotch whisky and gin. "This new trade deal provides us with a gateway into India," states Sharma, who targets £2mn in sales by year-end, with 60% coming from overseas.
Crafting a New Narrative
The halving of tariffs on Scotch imported to India, now standing at 75% rather than the previous 150%, is set to benefit craft operations like Rutland Square. However, Indian state tariffs—amounting to a further 150% levy on top of federal charges—were not addressed in the announcement. The agreement, nonetheless, has the potential to stimulate exports to India by £1bn over the next five years, as per the Scotch Whisky Association.
India is the world's largest market for Scotch exports in volume, with 192mn bottles exported in 2024, accounting for 13.7% of all exports. Yet it holds the fifth spot in terms of value, at just £248mn, a quarter of the value of exports to the US.
Industry Giants Momentum
Eysphorting the sentiments of the smaller operations, industry giants like Diageo also welcome the deal. India represents 6% of Diageo's net sales or approximately $1.3bn annually. For Diageo, higher-end brands such as Johnnie Walker, bottled in Scotland, make up 24% of their sales in India, while Scotch imported in bulk and bottled locally takes up 6%. The remainder of their sales comprises local whisky brands unaffected by tariffs.
Experts estimate that the tariff reduction could boost Diageo and Pernod Ricard's earnings per share by low single digits. However, analysts caution on the sector due to lukewarm demand and high input costs in the USA, despite the partial UK-US trade deal and its minimal impact on Scotch exports to America.
Crafting a Dream for Small Brands
With reduced tariffs, smaller brands can now afford to enter the Indian market—a dream they have long aspired for. Exporters to India, the world's biggest customer for bulk Scotch, can look forward to pushing pricier bottled Scotch, which could lead to long-term upsides.
Distilleries like Edinburgh's Holyrood distillery and the Isle of Raasay distillery, off Skye, have already started planning launches in India. Smaller distilleries, however, will need to build distribution channels, expand marketing spend, and consider intellectual property protection.
In all, this deal presents a mix of opportunities and challenges for craft brands. They'll need to navigate the complex market dynamics, build robust distribution channels, and think critically about IP protection. This is indeed an exciting period, one that allows smaller players to penetrate new markets and shape the narrative of Scotland's finest spirits.
The retreat of tariffs on Scotch imported to India opens a path for craft operations like Rutland Square to invest in expanding their markets and finance growth, as stated by Nishant Sharma. With India being the largest market for Scotch exports in volume, the recent UK-India trade deal potentially stimulates exports to India, increasing sales opportunities for small brands.
