India-UK Trade Deal Takes Effect, Lowering Tariffs on Scotch Whisky

Indian Prime Minister Narendra Modi gestures as he speaks during a joint press conference with Australian Prime Minister Anthony Albanese on July 9 in Melbourne, Australia. (AP Photo/Hamish Blair)

India and the United Kingdom officially implemented their long-awaited free trade agreement Wednesday, reducing tariffs on thousands of products while beginning a phased opening of India’s closely protected alcoholic beverage market.

The agreement marks a major milestone for the Scotch whisky industry, with British spirits producers set to benefit from gradually lower import duties in one of the world’s largest and fastest-growing premium spirits markets.

“The opening up of the Indian market represents a significant opportunity for the UK as the world’s leading exporter of spirits, and a welcome boost for the Scotch whisky industry,” Nodjame Fouad, CEO of Pernod Ricard’s Aged Spirits and Champagne division, said in a statement.

“It supports Scotland’s export ambitions, enhancing competitiveness in a key international market and reinforcing the contribution our industry makes to jobs, investment and economic growth across Scotland and the wider UK.

“We are grateful to the UK and Indian Governments for their efforts in delivering this agreement and we will work hard to help realise its full potential.”

Under the Comprehensive Economic and Trade Agreement, Britain will immediately eliminate duties on 96.8% of tariff lines, while India will remove tariffs on 64.1% of tariff lines immediately and phase out duties on an additional 21% over time. Alcoholic beverages are among the sectors receiving gradual market liberalization rather than immediate tariff elimination, according to Reuters.

The pact gives British exporters greater access to India’s market across several industries, including automobiles, financial services, education and alcoholic beverages. Indian exporters, meanwhile, receive duty-free access for most British tariff lines covering products such as textiles, leather goods, footwear, gems and jewelry, seafood and processed foods.

Indian Prime Minister Narendra Modi called the agreement a significant step forward for both nations.

“The landmark agreements will deepen our Comprehensive Strategic Partnership, catalyse trade, investment, growth, job creation, innovation and strengthen the economic ties between our nations,” Modi wrote on social media.

India imported approximately $11.68 billion in goods from Britain during the country’s 2025-26 fiscal year, while exporting $13.44 billion to the UK, according to Indian government data cited by Reuters. Services trade between the two countries totaled roughly $35.4 billion in 2024.

The agreement also expands access across 137 services sectors, including information technology, telecommunications, finance and education, while easing temporary work rules for business travelers, investors and professionals.

In a separate social security agreement, eligible Indian workers and their employers will be exempt from paying into Britain’s National Insurance system for assignments lasting up to five years, a provision expected to benefit approximately 75,000 professionals and 900 employers.

For the spirits industry, India has long represented one of the world’s biggest growth opportunities. The country’s high import duties have historically limited Scotch whisky sales despite strong consumer demand for premium international brands.

The phased tariff reductions are expected to improve the competitiveness of Scotch whisky in India over time, potentially reshaping one of the world’s largest whisky markets.

The agreement also opens Britain’s government procurement market — estimated at roughly £90 billion annually — to Indian suppliers while providing reciprocal opportunities in India worth an estimated $114 billion, according to Reuters.