Industry
Indian single malts keep up spirits despite Trump’s tariff heat
Summary
- Premium whisky has greater ability to absorb tariff costs, but the steep hike in levies could threaten overall exports from India's overall alcobev sector.
New Delhi: India's premium whisky, including single malts, headed to the US may not be hit even as the liquor sector may feel the heat of the additional 26% reciprocal tariffs introduced by the US.
“An increase in tariffs does have an impact, but whether it will be significant or just a knee-jerk reaction will become clear only after the release of the detailed schedule in the next few days," said Vinod Giri, director general, Brewers Association of India (BAI).
However, Giri said, the additional duties may not impact premium spirits such as single malts and other high-end categories as these products have a greater capacity to absorb tariff-related costs.
The steep rise in duties could threaten the sector’s overall momentum, particularly in the case of ethyl alcohol, said trade experts. The existing duty on the category was 3.3%.
India’s presence in the global spirits landscape remains modest but the country has made notable gains in recent years, with rising consumer recognition of Indian single malt brands. India’s exports of alcohol and related spirits to the US rose from $7.09 million in FY23 to $10.5 million in FY24, registering a growth of 48%, according to commerce ministry data.
India sold around 675,000 cases of single malt whisky in 2023, growing 16% over 2022, according to the Confederation of Indian Alcoholic Beverage Companies. Domestic brands accounted for over half of this total. Of the 220,000 cases of single malts produced by Indian companies, about 100,000 cases were exported.
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‘Resilient enough to absorb the heat’
The US alcoholic beverages market was valued at $543.13 billion in 2024, with projections indicating it could grow to $806.44 billion by 2033, reflecting a compound annual growth rate (CAGR) of 4.99% over the forecast period, according to GlobeNewswire. This makes the American market a key target for Indian exporters over the long term, despite current headwinds.
While the volume remains modest, the new duty structure could discourage further growth, particularly for small and medium-sized distillers, experts said. However, large players in the premium segment seem unfazed.
High-end Indian spirits, which have carved out a niche in mature markets such as the UK and Singapore, are not likely to feel the pinch.
"Reciprocal taxes have shaken the whole world—it’s a knee-jerk reaction and capital markets are affected. However, when it comes to Radico Khaitan’s premium brands, which are seen as a lifestyle statement and chosen by those who prefer the finest, even a 30% hike is unlikely to have a serious impact," said Amar Sinha, chief operating officer at Radico Khaitan. “If costs rise marginally, the segment is resilient enough to absorb the increase. We are not overly perturbed by these changes and will adjust ourselves accordingly."
Sinha said this is a stage where companies are still trying to understand the ramifications of Trump’s reciprocal tariff move.
"It's (reciprocal tariff) a substantial increase but since Indian single malt sales in the US are relatively low, it will have minimal impact," said Paul P. John, chairman, John Distilleries Ltd. “Also, tariffs have been increased for most countries producing single malts so overall selling price in the US will increase and I expect things to settle down in a few months."
Awaiting clarity
The overall scale of India’s alcoholic beverage exports remains limited in the US market, though there is an uptick in exploratory efforts.
“India exported alcoholic beverages worth around $270 million in 2023–24, but only a small portion was destined for the US. Within that, direct-to-consumer exports of single malt or blended whisky form an even smaller share, with most volumes currently going to markets like the UAE, Singapore, the Netherlands, and several African countries," said Nita Kapoor, co-founder of Delhi-based alcobev advisory Integrated Insights Consultancy.
“While still small, Indian single malts and blended whiskies are beginning to carve a niche in new markets, including the US, the UK, and the EU. The additional 26% tariff imposed by the US may slow this momentum, but since price hikes will affect global players across the board, Indian brands are likely to remain competitive," she said.
Industry bodies, however, are concerned that prolonged tariff escalations could disrupt trade flows and affect long-term market access.
“At this point, there is no specific clarity on spirits. However, we believe reciprocal tariffs will have their ramifications and will create challenges and pain for both sides," said Sanjit Padhi, CEO of the International Spirits and Wines Association of India (ISWAI). “Both governments should engage in bilateral talks and work collectively to create a level playing field to achieve equitable outcomes."
India is the world’s third-largest consumer of alcohol, with spirits making up 65% of the market. The tariffs come when the domestic industry prepares to scale up exports with support from agencies such as the Agricultural and Processed Food Products Export Development Authority (APEDA) and the commerce ministry.
“While we await further clarity on the US tariff on spirituous beverages, we believe that India and the US should continue to engage in bilateral trade discussions to achieve a mutually beneficial and equitable outcome across all sectors," said Anant S. Iyer, director general, Confederation of Indian Alcoholic Beverage Companies (CIABC).
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