According to a recent report endorsed by TOI, the ongoing discussions regarding a proposed free trade agreement (FTA) between India and the UK have led to a conflict known as the “angel’s share” dispute. This disagreement has emerged between Indian whisky producers and Scottish brands.
The UK has a significant market in India for its scotch whisky and has made several demands during the FTA negotiations. One of these demands is a reduction in the current 150% import duty on scotch whisky. Additionally, the UK is requesting that the spirit be classified as whisky after maturing for a minimum of three years.
Indian whisky makers, however, have raised concerns about the impact of these conditions. They argue that due to the hotter weather in India, more than one-third of the whisky would be lost during the maturation process. Indian producers are also seeking a minimum import price of $5 to prevent under-invoicing practices when international companies ship products to their subsidiaries in India.
The Indian whisky makers oppose the UK’s proposal to reduce the import duty from 150% to 75% immediately upon signing the FTA, and subsequently to 30% over three years. They suggest a progressive reduction to 50% over a span of 10 years.
Data from earlier this year reveals a 40% increase in whisky imports in the first eight months of the current financial year, contradicting the UK’s claims that Scotch whisky does not have sufficient opportunities in India. Whisky imports from the UK alone reached nearly $200 million during this period, compared to $148 million in the previous fiscal year.
The term “angel’s share” refers to the amount of alcohol that evaporates during whisky maturation in wooden casks. India’s climate accelerates maturation, resulting in a higher rate of evaporation and heat-related losses compared to Scotland. This leads to a loss of approximately 35% of the spirit stored in a barrel over three years. Indian whisky makers argue that the conditions proposed by the UK are unacceptable and unaffordable.
Vinod Giri, the director-general of the Confederation of Indian Alcoholic Beverage Companies (CIABC), expressed concerns about the UK’s refusal to accept their plea and provide market access. CIABC represents various prominent Indian spirits producers such as Mohan Meakin, Radico Khaitan, Tilaknagar Industries, Devans Modern Breweries, Amrut Distilleries, and Jagatjit Industries.
The Indian whisky makers have conveyed their views to the government, and assurances have been given that their concerns will be taken into account during the negotiations. They are even willing to allow UK labs to test the maturity of their whisky to address quality concerns. However, the conflict between the two sides continues as the negotiations proceed.
