India has recently signed a new trade deal with the UK that will gradually reduce import duties on alcohol over the next 10 years. While this move is expected to benefit consumers with lower prices and more choices—especially for premium international liquors—it poses a serious challenge for Indian liquor manufacturers.
What This Means for Indian Brands
Domestic liquor companies are already struggling with high taxes, complex regulations, and limited marketing freedom. Now, they’ll also face stiff competition from international brands that will soon become cheaper due to the duty cuts. This could especially hurt premium Indian brands, which are trying to make a mark in the higher-end market segment.
Big Tax Burden, Shrinking Margins
Taxes in India make up about 65% to 80% of the final retail price of alcohol, depending on the state. Add to that the cost of licenses, label registrations, and varying excise policies across states, and it becomes clear that Indian brands have very little wiggle room to adjust prices or make profits. If they lower prices to compete with imports, their already thin profit margins could shrink further.
Small Businesses Will Suffer More
Many small and mid-sized alcohol companies (SMEs) operate on very low profits and depend heavily on local markets. Delays in distributor payments and high inventory costs make things worse. For these companies, competing with global giants could mean major losses, or even shutting down.
It’s Not Just About Business—It’s About Jobs
Homegrown alcohol brands don’t just pay taxes—they also create thousands of jobs across manufacturing, logistics, agriculture, and retail. In rural and semi-urban areas, where employment is already limited, these businesses are often a lifeline for many.
Unfair Playing Field in Exports
While Indian companies export some alcohol (worth $322 million in FY 2022–23), this is tiny compared to the UK’s £6.2 billion whisky exports in 2022. With their global branding and marketing muscle, foreign companies have a huge advantage in both pricing and scale. If Indian brands lose market share, it could lead to job losses, plant closures, and a drop in state revenues.
What Can Be Done?
Reducing import duties isn’t a bad idea—it shows India’s willingness to be part of the global market and give consumers better choices. But the government must also protect local industries. Some steps that can help include:
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Easier access to loans and capital for local brands.
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Grants or subsidies for upgrading production and marketing.
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Tax benefits to encourage innovation and the creation of premium products.
India must strike a balance between global trade and domestic growth. Without the right support, local liquor brands could be left behind in this new era of liberalisation.
The author, Avneet Singh, is the Founder and CEO of Medusa Beverages. Views expressed are personal.
