India & UK: Indian liquor makers body calls for cutting non-trade barriers on export of Indian alcoholic beverages to Britain

Indian liquor makers body CIABC on March 16 urged the government to ask the UK to reduce non-trade barriers to provide easy market access for domestic alcoholic beverages in Britain, the Outlook India reported.

The UK should also remove a restriction of minimum 3 years maturation period for whisky as well as for rum, as it has been scientifically established that in warm Indian conditions, spirit ages 3-3.5 times faster than in the UK, Confederation of Indian Alcoholic Beverage Companies (CIABC) said in a statement.

The Indian government should "ask the UK government for removal of non-tariff barriers to allow easy export of Indian made alcoholic beverages to the UK", it added.

The body has suggested that the Indian whiskies should be allowed to be sold in the UK, irrespective of whether they are made from malt, grain spirits or molasses-based spirits.

"They (the UK) should accept Indian recipes as India accepts British recipes for whiskey," CIABC Director-General Vinod Giri said.

India exports just Rs 5 crore worth of alcoholic beverages annually to the UK against an import of Rs 1,300 crore, he added.

Exports to the UK constitute only 0.2 per cent of India's total outward shipments of alcoholic beverages, whereas imports from the UK stood at 24 per cent of India’s total import of alcoholic beverages.

Giri further noted that "restrictive" trade policies are also hampering the growth of Indian exports to the EU and UK.

"While the export of alcoholic beverages from India stood at 7.3 million cases (9 litre each) in the year 2019-20, the exports to the entire EU (including the UK) were less than 30,000 cases which consisted of Indian super premium malt whiskies," he said.

The definition of products by the UK is such that it does not permit Indian whisky and rum, which are predominant exports to the rest of the world, and this has made the Indo-UK trade heavily skewed against Indian products, he added.

The government should not come under any pressure to reduce import duties on imports of Scotch whiskey from Britain as it would hurt domestic manufacturers, Giri said.

Since the imports are already dominating the Indian market, any reduction in BCD (basic customs duty) will make matters worse and squeeze Indian products totally out, he noted.

"The balance of trade in alcoholic beverages is highly skewed in favour of the UK and any reduction in BCD will further worsen it," he said, adding preferential treatment to imported liquor by some state governments has already created undue hurdles in the growth of Indian products.

Indian products are already at a disadvantage even at the current BCD level. In many major Indian cities, imported products have a price advantage vis-a-vis comparable Indian products and reducing the duty will make Indian products less competitive, he added.

CIABC said that if the government needs to tweak the BCD to facilitate the trade treaty between India and UK, it should reduce BCD gradually to a sustainable level over a time window, which allows existing disparities to diminish.

"The BCD should be reduced from today’s level of 150 per cent to 50 per cent in the next 10 years," Giri noted.

He also suggested the government to prevent predatory pricing and dumping through a threshold import price (or minimum import price) so that products priced below which are taxed at the same rate.

17 March, 2021