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India-UK free trade deal: Britain's Scotch whisky industry to miss out on the big Diwali party

India-UK free trade deal: Britain's Scotch whisky industry to miss out on the big Diwali party

It was former UK Prime Minister Boris Johnson who had set the Diwali deadline for the trade deal with India. However, new UK Trade Secretary Kemi Badenoch recently said that her country was no longer working to that deadline.

In 2021, India was Scotch whisky’s 8th largest export market by value worth £146m (£102m in 2020), and second largest by volume, with the equivalent of 136m bottles exported (95m bottles in 2020). In 2021, India was Scotch whisky’s 8th largest export market by value worth £146m (£102m in 2020), and second largest by volume, with the equivalent of 136m bottles exported (95m bottles in 2020).

Britain's Scotch whisky industry was expected to be one of the biggest winners in the long-awaited Indo-UK free trade deal which now won't be meeting the much-anticipated Diwali deadline.

It was former UK Prime Minister Boris Johnson who had set the Diwali deadline for the trade deal with India. However, new UK Trade Secretary Kemi Badenoch recently said that her country was no longer working to that deadline. She further said that it makes sense to focus on the deal itself rather than the date.

While the date doesn't matter for the new administration in the UK, it certainly does for the whisky industry there as it will miss out on another Diwali party here in India - the largest whisky market in the world.

Alcohol consumption during Diwali is very high in India and capturing this season would have made huge commercial sense for the Scotch whisky industry which accounts for 2 per cent of the total Indian whisky market (production of 2.4 billion bottles annually).  

Indian whisky production is over two and a half times the total volume of total Scotch whisky production. In 2021, India was Scotch whisky’s 8th largest export market by value worth £146m (£102m in 2020), and second largest by volume, with the equivalent of 136m bottles exported (95m bottles in 2020).

For the UK, the deal would have secured jobs and increase the industry’s contribution to the economy by more than £300 million to nearly £6 billion. Unlocking tariffs into India could potentially boost revenue to the Indian government, both at the Centre and the states, by £3.4 billion annually.

Scotch Whisky Association CEO Mark Kent has called the ongoing negotiations a once-in-a-generation chance to give more Scottish distillers the opportunity to do business in India. He, however, said that the industry wants to see a deal agreed upon, but not any deal.

"We want to see a deal agreed, but not any deal. To deliver for the industry, any agreement must open up the market to more Scotch Whisky producers, which will in turn generate hundreds of new jobs across the UK, hundreds of millions of pounds of additional exports, and boost investment and revenue in India,” he said.

Kent also said that securing a deal with India to reduce the 150 per cent tariff on Scotch whisky was the industry’s top international trade priority.

Industry insiders from other sectors also want to tread with caution, especially after the reports of negotiations hitting a roadblock post UK Home Secretary Suella Braverman’s comments on Indians over-staying their visas.

The Ministry of External Affairs confirmed the deal is being worked upon so did the UK Trade Secretary.

Organisations working incessantly for a long time since the deal was announced in January 2022 now want to walk on the side of caution.

In Brexit Britain when the economy is on a downward spiral and the government in constant turmoil, the Indo-UK trade deal would come as a jewel in the crown.

Also read: How Suella Braverman has put India-UK free trade deal on the verge of collapse

Also read: No longer working to Diwali deadline for India trade pact, says UK trade minister

Also read: UK needs FTA much more and India should play like a winner, says Lord Meghnad Desai