India's recently concluded Free Trade Agreement (FTA) with the United Kingdom presents a mixed bag for the alcoholic beverage sector, with no duty cuts for UK wines and only limited concessions for British beer. This decision comes as the agreement, which was finalized on May 6, 2025, is now undergoing legal vetting and is expected to be implemented in over 15 months.

While certain sectors like textiles, leather, and IT are expected to receive a significant boost from the FTA, the alcoholic beverage industry has expressed some concerns, particularly regarding the reduced import duties on British spirits. The agreement aims to eliminate import duties on 99% of Indian goods entering the UK, while India is keen on protecting its sensitive sectors.

India has decided against offering any duty concessions on British wines. For British beer, the FTA offers only limited import duty benefits. However, Scotch whisky and cars are set to become cheaper as a result of the deal. Duties on Indian garments and leather products will also be reduced in the UK.

According to reports, India will reduce the duty on UK whisky and gin from 150% to 75% immediately, with a further reduction to 40% planned over the subsequent ten years. This phased reduction is expected to provide a competitive edge to British spirits in the Indian market, which is currently dominated by country-made liquor and India-made foreign liquor. Scotch whisky constitutes a small fraction of the total whisky market in India.

The agreement does not include the Minimum Import Price (MIP) provision for British alcoholic beverages, a measure that domestic liquor manufacturers had been advocating for to ensure a level playing field and prevent potential dumping and under-invoicing by foreign companies.

The FTA is projected to significantly boost bilateral trade between India and the UK, with the aim of doubling it to $120 billion by 2030. The UK government has described the agreement as a "huge economic win," anticipating it will add £4.8 billion a year to the UK economy by 2040. It is also expected to increase UK wages by £2.2 billion annually.

Under the terms of the FTA, India will cut tariffs across 90% of British product lines, including automobiles (from 100% to 10%), whiskey and gin (from 150% to 75%, dropping to 40% by the tenth year), as well as food and drink products, aerospace, medical devices, cosmetics, and electrical machinery. These tariff cuts are estimated to be worth over £400 million, based on 2022 trade figures. The FTA also addresses issues of environmental and labor standards, gender equality, and anti-corruption.

As part of the agreement, Indian workers temporarily in the UK, along with their employers, will be exempt from paying social security contributions in the UK for three years. This is expected to result in savings of around 20% of salary, benefiting over 60,000 employees from the IT sector alone.

The FTA is one of three economic and trade agreements between the two countries. The other two are a Double Contribution Convention Agreement (or social security pact), which was concluded alongside the FTA, and a Bilateral Investment Treaty (BIT), which has yet to be finalized.