NEWS
INDIA LIQUOR MAKERS LOBBIED FOR MINIMAL CONCESSIONS IN UK FREE TRADE DEAL
By Siulan Law Mathews DipWSET
13-3-2023
Credit: Naveed Ahmed/Unsplash
India’s domestic liquor industry, rattled by the speedy growth in the import of Scotch whisky, is lobbying the Indian government hard to ensure that only minimal concessions are given in phases and over long time in the India-UK free trade agreement (FTA) negotiations.
The next round of talks is scheduled from 20 to 24 March, while New Delhi is seeking a reduction or elimination of duties for its labour-intensive sectors such as textiles, leather, gems and jewellery, the UK wants tariffs concessions for Scotch whisky and automobiles.
The UK was reported to have asked for the liquor tariffs to be reduced from the current 150 percent to 50 percent in phases, besides importing barrels of whisky from the UK instead of bottles so that bottling and packaging can happen in India.
The Confederation of Indian Alcoholic Beverage Companies (CIABC), recently sent a memorandum to India’s commerce ministry to voice their worries about the potential damages the FTA can do to the industry.
“According to the Scotch Whisky Association (SWA), India has become its largest export market globally. This is also supported by the Government of India data which shows imports growing 148 percent from April to September 2022 over the same period the previous year.” CIABC director-general Vinod Giri said in the memorandum.
“During this period, the domestic industry grew just a little over 20 per cent. These facts simply disprove the claim made by some SWA members that Scotch whisky is being denied fair opportunity in India.”
“The fact that Scotch whisky is growing many times faster than the domestic whisky industry even in the absence of an FTA, puts in question the very need for an FTA. Customs duty concessions, coupled with a misplaced approach of supporting imported products would be catastrophic for domestic industry. We appeal to the government to tread carefully on the UK FTA and ensure minimal concessions are given and that too in a long-phased manner.”
The CIABC also complained that Scotch are sold in India at prices even lower than in the UK: a bottle of the largest-selling brand retails in Delhi for INR1,700 (USD20.6) per 750ml bottle against the pound equivalent of INR1,900 in Tesco stores in the UK.
The liquor industry body said Scotch makers are following an opaque ‘‘transfer pricing’’ methodology when selling to their Indian subsidiaries.
It said the price at which the Indian arm gets the drink from the UK is just INR174 per bottle compared with INR214 in tourism destinations such as Dubai — the “under-pricing” deprives the government of customs duties.
CIABC argued that there should be a minimum procurement price of USD5 (INR412) per bottle, inclusive of cost, insurance and freight, for the Indian subsidiary.
CIABC is the most representative organisation of Indian liquor makers, whose members include major Indian companies such as Allied Blenders & Distillers, Radico Khaitan, Inbrew, Mohan Meakin, Jagatjit, Tilaknagar, Alcobrew and Amrut.
(the writer can be contacted at: info@thewinechronicle.com)
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