Indian whisky makers protest tax bias favouring imports
India’s spirits industry says the new free trade agreement with Britain will worsen existing tax discrimination against local producers. The Confederation of Indian Alcoholic Beverage Companies (CIABC) warns the pact could make Indian premium brands less competitive at home.
The recent Free Trade Agreement between Britain and India will further increase the disadvantages Indian spirit producers face in their home market, the Confederation of Indian Alcoholic Beverage Companies says.
Under the pact, duty on Scotch whisky will eventually fall to 40%, being halved to 75% initially once the deal comes into force, which is expected to be next year.
Higher charges on local spirits than on imports
But Indian distillers claim they are already facing discrimination in many states that impose higher overall charges on domestic products than they do on “Bottled in Origin” spirits, international brands imported ready for sale, already bottled and labelled.
CIABC says Indian brands face “exorbitantly high brand registration fees” compared to imported BIO products, hampering product entry in a dozen states.
Customs cuts favour imports over home-grown labels
It said that under free trade agreements, customs duty will be reduced further on BIO products, and the existing high excise duties levied by the state government on the Indian premium brands will make the home-grown industry “less competitive”.
Those charging the highest differentials, it claims, are large alcoholic-consuming states such as Maharashtra, Delhi and Kerala.
Maharashtra: duty gap widens in Scotch’s favour
CIABC told the Economic Times it has been “writing to various state governments flagging various anomalies in their excise policies which put Indian spirits manufacturers at a disadvantage compared to their foreign counterparts, which import various brands.”
As an example, the journal said that in Maharashtra, the excise duty imposed on domestic producers is double that on BIO spirits.
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Until 2021, the Maharashtra Government used to charge 300% on BIO products, which was reduced to half in 2021, but IMFL brands continue to pay the higher level.
“This reduced duty has led to a surge in BIO sales (from 5,000 cases per month in 2021 to 42,000 cases per month in 2024).
“This has given BIO products an unfair edge over domestic brands and has also led to a reduction in state revenue due to a fall in sales of IMFL. High duties on Indian premium brands make them less competitive,” said CIABC Director General Anant S Iyer.
The trade body said in Maharashtra, a case of Amrut Fusion premium Indian single malt whisky has to pay Rs 6,799 (£57.78) in duty, while Johnnie Walker Black Label is charged Rs 4,785 (£40.66).
Delhi: registration fees deter Indian premium whiskies
Similarly, in Delhi, imported brands have to pay a lower fee and taxes to sell their products compared to their IMFL competitors.
“New Indian brands, particularly premium, luxury, niche products, face prohibitive costs, thus hampering their entry. There are several premium Indian single malts, which are popular in other states and also overseas, which have stayed away from Delhi due to the exorbitant registration fee,” says Iyer.
Kerala: multiple layers of tax bias
In Kerala, discrimination between IMFL and imported spirits exists in “excise duty, sales tax, retail margin, cash discounts, and STN charges (special transfer note),” the association alleged.
“On the other hand, BIO brands enjoy much lower taxation and levies, thus pushing their sales since the MRPs of BIO brands are much cheaper than Indian premium brands for the similar supply prices,” said CIABC.
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