British Scotch companies seek safeguard against excise duty hikes
The Scotch Whiskey Association (SWA), the trade body representing UK Scotch producers, has discussed safeguards with its Indian counterpart as part of ongoing trade talks to prevent further increases in excise duty and other taxes on alcohol at the state level. urged the British Government to
The organization fears that any import duty liberalization could be offset by an increase in state-level taxes.
In response to an inquiry by the International Trade Committee of the British Parliament into the ongoing Free Trade Agreement (FTA) between the UK and India, the SWA has said that in addition to import duties, wine is also subject to “extremely high” excise duties and at the state level. but other taxes.
“There is also concern in the industry that any liberalization of import duties could be offset by an increase in state-level taxes. The SWA would welcome negotiators seeking safeguards to prevent this, as well as excise and other Will work to establish framework and discipline under the FTA to facilitate engagement with states to prevent further increase in taxes.
Liquor has been kept out of the purview of Goods and Services Tax as it is the biggest source of revenue for many states.
Excise duty structures and tax burden vary across states, with extremely high rates and complex structures.
India is the UK’s second largest market for Scotch by volume, importing the equivalent of 136 million bottles worth £146.2 million in 2021.
“Over 75 per cent of this is bulk exports, either bottled in India as Scotch whiskey or blended with locally produced spirits. However, it is only 2 per cent of the market as India is the largest whiskey market in the world.
The SWA said securing an FTA that would provide greater access to Scotch in India would be “transformational” for the sector. Citing a study by the Fraser of Allender Institute at the University of Strathclyde, it said that for every additional £1 million in exports of Scotch to India, 16 direct and indirect jobs would be created in the UK supply chain.
India imposes a 150 percent import duty on alcohol, which includes 50 percent basic customs duty and 100 percent Agriculture Infrastructure Development Cess. This tariff applies equally to bottled scotch and bulk scotch imported for local bottling as scotch and used as an ingredient in Indian spirits.
“Modelling suggests that a phased reduction in tariffs to a final rate of 30 per cent over a three-year transition period would lead to a cumulative total of £1.24 billion in exports of Scotch whiskey to India over the first five years. Tariff Liberalization for Scotch Whiskey The economic opportunities afforded by it mean that this should be a priority for the UK government in negotiations,” the SWA said in its submission.
India and the UK started talks for the FTA in January last year with an aim to conclude the talks by Diwali, but the deadline was missed due to a change in leadership in the UK. Both countries have closed 13 out of 26 chapters.
The eighth round of talks for the proposed FTA between the two countries is to be held on March 20-24.