Scotch whisky sector calls for a trade deal with India

Scotch whisky exporters want import tariffs reduced in any future trade deal with India

The Scotch whisky sector wants a reduction in the 150% tariff that India imposes on imports of its products in any bilateral trade deal the UK seeks following Brexit in March 2019.

But various hurdles will need to be overcome in negotiations before a deal is agreed, it emerged from comments made by Indian officials during a recent trade mission to the UK.

“India is a growing market for us and is already an important destination for our exports,” said Rosemary Gallagher, head of communications at the Scotch Whisky Association (SWA).

“The import tariff on Scotch whisky is currently 150%, which makes Scotch too expensive for much of the population. We are hopeful the UK government will prioritise a trade deal with India to see this tariff reduced, and help the market for Scotch expand further.”

India is a fast-growing market for Scotch whisky. In April, the SWA reported that the value exports of Scotch to India were up almost 14% to £97M, making it the ninth biggest market. The EU is the biggest market, worth around £1.2bn, with North America next at more than £1bn.

India’s growing population of 1.3bn, which includes a rapidly growing urban middle class, offers a huge potential market for UK-produced food and drink post-Brexit, according to trade experts. But, agreeing a bilateral trade deal, including food and drink, is unlikely to prove easy.

Business liberalisation in India

Despite the business liberalisation that has occurred in India over the past two years under Prime Minister Narendra Modi, a number of barriers to trade remain, and there are also inconsistencies in food production standards between the UK and India.

While tariffs on imports, such as Scotch, could be looked at under a future bilateral deal, a number of obstacles to improved trade would need to be negotiated, suggested Amb Dinesh Patnaik, the deputy high commissioner of India to the UK, speaking at a meeting in London earlier this month (July 14).

“What we will be looking at, post-Brexit, is an agreement that looks at where the gains are,” said Patnaik. But, he refused to be drawn further on what these might be, or whether India would be prepared to negotiate a reduction in its tariffs on whisky imports.

He said agreement would be easier for automobiles, rather than food and drink, given that India already has close links with the UK in this area. Jaguar Land Rover has been a wholly owned subsidiary of Indian company Tata Motors since 2008. Tata also has steelmaking operations in the UK.

The same is not generally true for the food and drink sector. “If you let us take over some of the whisky companies, probably, we can look at that,” he joked, adding more seriously: “It is something that we can really work on.” He added that bilateral trade negotiations were unlikely to begin until after the UK left the EU. “The audit is critical to finding out these problems,” he added.

Patnaik dismissed the suggestion that in a “quid pro quo” for access to its food markets, India would be looking for a relaxation of visa restrictions on its nationals to the UK, making it easier for Indian students to study at British universities.

Patnaik made his remarks during a trade mission involving the Indian Minister for food processing Harsimrat Kaur Badal to meet UK food and drink business leaders. The minister wanted to highlight the opportunities on offer for investment in India – a food and grocery market predicted to be worth $915bn (£699bn) by 2020.

World Food India 2017

The mission was in advance of the World Food India 2017 exhibition and congress, which takes place in New Delhi from November 3–5, and is designed to encourage foreign food processing investment in the sub-continent. It followed a similar Indian trade mission to Chicago in June.

The meeting was also attended by the former Labour trade secretary, Rt Hon Patricia Hewitt, chair of the India Business Council. Hewitt highlighted the “great scope” for increasing food and drink trade between the two nations. She said World Food India 2017 would provide an ideal opportunity for UK importers and buyers to source Indian produce and food.

“There are real opportunities for Indian exports in areas that wouldn’t compromise India’s own food security or need to feed its own population,” said Hewitt. This would be unlikely to include dairy products, since India’s consumption needs currently exceed its domestic production capability.

Also speaking at the meeting, Paul Stennett, chief executive of the UK Accreditation Service (UKAS) – the body recognised by the UK government to assess against internationally agreed standards organisations that provide certification, testing, inspection and calibration services – offered to collaborate with UKAS’s Indian equivalent to develop agreed standards to facilitate trade between the two nations post-Brexit – both exports of ingredients from India to the UK, and exports of UK food and drink into India.

“This is a great opportunity for both of our countries,” said Stennett.

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