Cheaper Scotch undercuts Indian whisky makers after India halves import duties

BENGALURU, India — Indian whisky makers are facing new pressure as cheaper Scotch reaches store shelves at prices that can undercut locally distilled brands, sharpening competition in one of the world’s largest whisky markets and potentially reshaping the economics of the broader spirits business.

The shift follows a cut in Indian import duties on Scotch whisky from 150% to 75% under India’s trade agreement with Britain. The lower levy is reducing costs for companies that import Scotch either as finished bottles or in bulk for local bottling and blending. For distillers that make their spirits in India and do not rely on imported Scotch, the same change is making it harder to compete on price.

The gap is already visible in retail. Huli Spirits, a Mysuru-based producer, launched its rice malt whisky in Karnataka at Rs 2,650 for a 750ml bottle. By contrast, J&B Rare was selling for Rs 1,375 at Bengaluru retailer Tonique in October, according to earlier reporting by The Times of India. Tonique said that price had fallen from Rs 2,835 and linked the drop to local bottling. At those levels, the imported label was Rs 1,275 cheaper than the local product, or roughly half the price.

Aruna Urs, founder of Huli Spirits, told The Times of India that smaller producers may not survive if that pricing trend continues. Her company makes spirits from locally sourced paddy and jaggery and does not import Scotch, leaving it exposed to competition from brands that benefit directly from the lower duty structure.

Arun Kumar Parasa of Unistil Alcoblends said cheaper Scotch was already hurting Indian single malt producers. He said reduced duties on bulk Scotch imported by some small and medium-sized distillers would offer only limited relief, because the main advantage would still go to businesses that can bottle or blend imported whisky rather than distill everything at home.

That distinction is becoming more important across India’s beverage market. Bulk Scotch arrives in large containers and can either be bottled locally or used as an ingredient in Indian whisky blends. That gives some companies a lower input cost and more pricing flexibility. Others, especially smaller distillers built around local grain, local production and premium positioning, face pressure both from cheaper imported finished products and from rivals that can use imported Scotch more cheaply in their own brands. The result could be a redrawing of competition across spirits, with importers and blenders gaining an advantage over producers whose business depends mainly on domestic distillation.

Jason Holway, a senior consultant at drinks research firm IWSR, said the price gap is likely to narrow further. He said that depending on the state, lower-priced blended Scotch whiskies are expected to become more attractive than they were before and may end up only modestly more expensive than Indian premium brands that use Scotch as an ingredient.

That matters in India because state taxes, retail controls and distribution rules already create large differences in how alcohol is priced and sold from one market to another. A national reduction in import duty does not translate evenly into store prices, but it can still alter buying decisions in urban premium outlets, airport retail and higher-income segments where consumers compare imported and domestic labels more directly.

The industry is also watching how customs authorities apply the new tariff regime. After the trade agreement took effect, customs officials questioned whether some bulk Scotch shipments qualified for the reduced duty. On Nov. 2, Commerce Secretary Rajesh Agrawal assured manufacturers that the benefit of the lower tariff would be protected and said commerce and revenue officials would work to resolve the classification dispute.

One industry executive, who spoke to The Times of India on condition of anonymity, said Indian buyers were also negotiating better purchase prices from suppliers in Scotland. The executive estimated that the duty reduction could cut retail prices by about 8%-10%, depending on state taxes and how companies choose to price their products. That same person said small manufacturers still face longstanding obstacles, including weak distribution access and restrictions on advertising, problems that become more serious when price competition intensifies.

The pressure is especially acute because the part of the whisky market where domestic craft and premium brands hope to grow remains small. Holway said IWSR data showed that the premium-and-above category, defined as bottles priced at Rs 2,899.01 or more for 750ml, accounted for less than 1% of whisky consumed by volume in India in 2025. That means even a growing interest in more expensive whisky has not yet produced a large enough market to protect many smaller producers from aggressive price moves at the lower end of the premium segment.

For larger companies, the change may create new room to maneuver. Businesses that import Scotch in bulk, bottle locally or use it in blends could protect margins or lower prices. For Indian distillers that emphasize locally made spirits, the challenge is different: they must persuade consumers to pay more for a domestic bottle at a time when imported Scotch is becoming more accessible.

The changing price structure could also affect how producers position products across the wider alcoholic drinks sector. If Scotch-based blends become more affordable, some consumers may trade up from lower-priced whiskies, while premium domestic makers may have to spend more on branding, packaging and in-store visibility to defend shelf space. In a market where regulation limits advertising and distribution remains uneven, lower tariffs on imports may carry as much strategic weight as demand trends.

For now, the immediate impact is being felt most clearly in whisky, where a tariff decision in New Delhi and price negotiations with Scottish suppliers are filtering down to retailers in cities such as Bengaluru. The longer-term outcome will depend on how much of the duty savings reach consumers, how customs rules are settled and whether domestic distillers can hold their place in a market where imported Scotch is no longer as far out of reach as it once was.