Number Theory: Bourbon duty cut may not be a bottoms-up move

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High on optics, low in immediate impact. That is the effect of the recent move by India to reduce tariff on bourbon whisky imports from all countries, from 150% to 100%, after US President Donald Trump criticised India’s “unfair” tariffs on American goods, particularly in the alcohol sector. Indians lean towards whisky, along with beer, and the share of bourbon whisky — of which the US is a major producer — in the overall Indian alcohol pie is very small.

Bourbon whisky represents a small segment of the Indian market.

Bourbon duty cut may not be a bottoms-up move

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  Post-pandemic high

  The value of alcohol imported by India in 2023-24 was $988.5 million (about ₹8,200 crore), as per government data. Over a 10-year period, the number has seen an average annual increase of about 14%, roughly doubling in five years. The increase in volume terms, while strong, is smaller: from 41 million litres in 2013-14, across all kinds of alcoholic beverages, to 109 million litres in 2023-24, or an average annual increase of 10.3%. Much of the surge in alcohol imports has happened after the Covid-19 pandemic, and was driven by whisky in 2022-23 and wine in 2023-24. India is also an exporter of alcohol, but at a relatively lower level. For close to a decade, India’s liquor exports in value terms ranged on either side of $200 million. But in 2023-24, they posted their strongest year-on-year growth during this period, of about 25%, to reach $275 million. Like imports, whisky also leads India’s alcohol exports, accounting for 57% of total alcohol exports.
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  British dominance

  The US is not the only country to publicly call for India to lower import duties on whiskey. Even the United Kingdom (UK) has sought similar concessions on scotch whisky as part of the India-UK Free Trade Agreement (FTA) that is currently under negotiation between the two countries. In alcohol, compared to the US, the stakes for India are much higher with the UK. Between 2015-16 and 2024-25 (as of November 2024), 52% of India’s $4.3 billion liquor imports came from the UK, as compared to just 2.5% from the US. Such a variance in share also exists in the whisky segment, the centre of attention in foreign trade right now.
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  Whisky bar

  Number Theory: Bourbon duty cut may not be a bottoms-up move Since 2015-16, the UK has accounted for 70% of India’s $2.23 billion whisky imports, led by its blended whisky and scotch whisky, while the US had a 3.3% share. During this period, India’s imports of bourbon whisky amounted to just $29 million, against $883 million of blended whisky and $690 million of scotch whisky. The latest duty cut will provide some price latitude to American bourbon whisky brands, but they will still need to cultivate a taste with Indian consumers to drive home that advantage. A duty cut of the magnitude seen for bourbon whisky can make foreign liquor cheaper for Indian consumers, and influence domestic market dynamics.