Alcohol companies for quid pro quo in EU, UK FTAs

Domestic whiskey makers have suggested a gradual reduction in basic customs duty on alcoholic beverages in India’s proposed trade agreements with the European Union and the United Kingdom along with a simultaneous removal of non-tariff barriers such as recipe criteria and maturation requirements in those countries.

The Confederation of Indian Alcoholic Beverage Companies (CIABC) has suggested the commerce and industry ministry to gradually reduce the customs duty to 50-75% from the current 150% in the next 10 years.

While India reduced the BCD to 50% in FY22 Budget, the government introduced an Agriculture Infrastructure Development Cess of 100%, leaving the overall tariff level unchanged at 150%.

“We’re not against duty reduction. We support it and want it to be gradual so that companies can prepare themselves,” said Vinod Giri, Director General, CIABC. The industry association has Radico Khaitan, Mohan Meakin and Amrut Distilleries, among others as its members.

Talks have revived on the proposed trade agreement with the EU that was stalled since 2013 as both sides were yet to iron out differences over several issues, including duty on cars and alcohol while New Delhi has reached out to stakeholders on the proposed India-UK Enhanced Trade Partnership.

As per the association, exports to the UK constitute only 0.2% of India’s total exports of alcoholic beverages whereas imports from UK are 24% of India’s total import of alcoholic beverages.

Giri said that non-tariff barriers are a “huge challenge” in India’s exports to the EU and UK.

One such barrier is the requirement of grain-based spirit, something that Indian companies can’t fulfil as liquor here is made from molasses due to high sugar production.

CIABC has pushed for Indian whiskies to be allowed to be sold in the UK as whiskies irrespective of whether they are made from malt, grain spirits or molasses-based spirits, and sought acceptance for Indian recipes the same way as India accepts British recipes for whiskey.

The second barrier pertains to the maturation requirement that is the whiskey should’ve aged for three years.

“However, in warm climates like ours, the evaporation loss is higher. They want it to be clearly mentioned on the label,” Giri said, adding that industry has asked for a quid pro quo in bilateral trade talks.

India exported around 73 million cases of alcoholic beverages in FY20 of which only 30,000 cases went to the UK and EU combined.

Giri said industry has also sought a minimum import price so as to check dumping and predatory pricing of whiskey.