India’s alcohol imports aren’t causing a trade hangover
In 2018-19, India imported $384 million worth of alcoholic beverages. This is less than 1% of India’s total imports in that year. In fact, unlike many other things, India does relatively well in exporting alcohol as well.Updated: Jan 22, 2020 13:41 IST
Earlier this week, it was reported that the commerce ministry has suggested that the government reduce the quota for buying alcohol at duty-free shops in India from two bottles to one bottle. This, reports said, was done with an eye on reducing non-essential imports. To be sure, the government has not confirmed these reports. An HT analysis of data available with the commerce ministry shows that alcohol imports are hardly a major factor when it comes to India’s trade deficit.
In 2018-19, India imported $384 million worth of alcoholic beverages. This is less than 1% of India’s total imports in that year. In fact, unlike many other things, India does relatively well in exporting alcohol as well.
India’s alcohol exports in 2018-19 were worth $223 million. To be sure, India’s alcohol imports have surged ahead of exports in the last decade. According to data from the Association of Private Airport Operators as reported by The Print, liquor imports for duty-free sales amounted to around $97 million. India’s total imports in 20198-19 were $514 billion, which makes both the $384 million and $97 million figures chump change. (See Chart 1)
While trade data does not paint an alarming picture about the macroeconomic impact of India’s growing preference for imported liquor, it does offer insights into what Indians drink. Whiskey accounted for almost half of India’s alcohol imports in 2018-19.
This means that Indians prefer imported whiskey much more than the rest of the world. According to United Nation’s COMTRADE database, whiskey had a share of 13% in total alcohol imports in 2018. And it is Scotch whiskey which is in demand. More than half of India’s whiskey imports are of the Scotch whiskey variant. While India’s preference for Scotch whiskey has been growing, share of certain other kinds of alcohol such as wine in India’s total import bill has been coming down in the past few years. (See Chart 2)
Both alcohol import and export growth rates have fallen after the 2008-09 economic crises, which suggests a squeeze in purchasing power of Indian and foreign consumers
India is also a relatively unimportant player when it comes to alcohol imports.
COMTRADE data shows that India was ranked 36th in the import of alcohol in the world in 2018. The US is at the top of the list while China is ranked fourth. The rankings change drastically if only whiskey imports are examined.
While the US continues to be at the top, India jumps to 15th position and China slips to the 18th rank.
(See Chart 3)