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India scraps prohibitive whisky tax
The Scotch whisky industry will be celebrating today following the announcement that India has scrapped its discriminatory and excessive duty on imported spirits.
The market has great potential for premium brown spirits, but international brands have been unable to operate because of the punitive tax regime, that added up to 550% to the price.
India and whisky have dominated the headlines in recent months, following the purchase of Glaswegian distiller Whyte & Mackay by Indian spirits giant UB Group. UB, owned by the flamboyant billionaire Vijay Mallaya, dominates the domestic market producing a plethora of "Indian whisky" brands, made from sugar cane.
Tension between the two sides has been high: India, led by UB, has been petitioning for a change to the whisky definitions to allow it to export its produce. The Scotch industry, meanwhile, has spearheaded a campaign through the World Trade Organisation to force India to drop the import taxes.
This amicable solution represents a major thaw in relations, opening up the way for Scotch brands to pour into a market that has a significant thirst for the spirit. With such a developed distribution network already in place, UB will hope to capture a significant share of the market for its Whyte & Mackay, Jura and Dalmore brands.
Commenting on the announcement by the Indian government, SWA chief executive Gavin Hewitt said: "Abolition of the discriminatory additional duty is a significant step towards fair competition in an important emerging market for Scotch whisky. The SWA has long campaigned for reform as the duty has unfairly restricted market access in contravention of WTO rules. Reform will not transform the Scotch whisky market in India overnight – a basic customs duty of 150% will still apply – but it opens up new possibilities for Scottish distillers to compete with domestic producers on a level playing field for the first time. This is also good news for Indian consumers, who can look forward to greater choice on internationally renowned brands."
Ben Grant, 4/7/07