Whether you like your Scotch whiskey neat or on the rocks, there is no denying that lesser excise duty, which can be as high as 150%, on bottles of Lagavulin and Laphroaig could go a long way in lifting some spirits. And that could have been possible had the UK and India signed the dotted line on the India-UK Free-Trade Agreement by the tentative deadline: Diwali 2022. But the two countries seemed to have gone back from the brink, and the Diwali deadline is no longer viable, confirmed UK Trade Secretary Kemi Badenoch to media on Friday.
During a visit to Glenkinchie Distillery, which is owned by Diageo, the maker of the iconic Johnny Walker line of Scotch whiskies, Badenoch, on October 13, assured Scotch makers that her office is working on deals to bring down trade barriers—read excise duty imposed on Scotch whiskies from the UK.
“We are close. We’re still working on a deal. One of the things that has changed is that we are no longer working to the Diwali deadline,” Badenoch reportedly said at East Lothian, Scotland-based distillery, the home of Johnnie Walker – the biggest selling Scotch whisky in the world.
“We’ve closed a lot of chapters (the sections for the negotiating text). The negotiations are progressing well. But we want to focus on the quality of the deal rather than the speed of the deal. Given the changes that have taken place – not just in government but the mourning period (for the Queen) and so on, it makes sense for us to focus on the deal rather than the day,” she added, according to BBC.
UK’s Scotch makers want greater access to the lucrative India, which is already the world’s biggest whiskey-drinking nation, through lower excise duties.
The UK exported £146 million worth of whisky to India last year from distilleries such as Glenkinchie but faced steep tariffs of up to 150%. With India forecast to become the world’s third-largest economy with a middle class of a quarter of a billion by 2050, any greater access to the market could be hugely significant for UK businesses, according to UK’s Department of International Trade (DIT), which Badenoch heads.
“Securing a deal with India to reduce the 150% tariff on Scotch Whisky is the industry’s top international trade priority. The ongoing negotiations are a once-in-a-generation chance to give more Scottish distillers the opportunity to do business in India. That is the scale of the prize on offer,” said Mark Kent, CEO of Scotch Whisky Association.
So, what went wrong?
A few things: The UK’s imposition of protective tariffs to restrict steel imports, India’s demand for easier access to the UK for students and IT workers—an ask that Suella Braverman, UK’s Home Secretary is opposed to, and whose comments on the matter reportedly angered New Delhi.
Steel: New Delhi wants UK to lower import barriers on steel imports and threatened retaliatory custom duties under WTO norms on $250 billion worth of goods imported from the UK if no agreement is reached. The UK earlier extended until 2024 the safeguard duty and quota restrictions on the import of certain steel products.
Visas & Braverman: India wants more visas for its students and IT workers, a demand that Braverman is opposed to.
India’s trade & commerce Piyush Goyal recent stated: “India would accord top priority to national interest in FTA negotiations. FTAs to be entered into after thorough consultation with all stakeholders including industry and the government will not diverge from this approach for the sake of deadlines”.
The minister’s comments come a day after UK’s Home Secretary Suella Braverman attacked the India-FTA, saying it would increase immigration to the UK.
“I have concerns about having an open borders migration policy with India because I don’t think that’s what people voted for with Brexit,” Braverman told British magazine The Spectator. She added that Indians form the “largest group of people who overstay their visas” in the UK.
The statement has angered New Delhi, which reportedly retaliated by making it harder for British tourists and businessmen to get Indian visas, according to a report.
