Over a ten-year period, the tax on alcoholic beverages like Scotch whiskey and gin will decrease from 150% to 75% and then to 40%.

The federal government has asserted that the India-UK free trade agreement (FTA) would not have a negative effect on the indigenous automotive and alcohol industries, even though India has pledged to lower tariffs on these goods for British companies. Over a ten-year period, the 150 percent tariff on alcoholic beverages, including Scotch whisky and gin, will be reduced to 75 percent and then to 40 percent.

According to an official, the local market would not be greatly impacted by the gradual rise in Scotch whisky imports. The import tax decrease is spread out over a longer time frame, and there will still be a sizable customs fee even after that. The Scotch Whiskey Association reports that, with 192 million bottles exported in 2024 compared to 167 million in 2023, India has reclaimed its top spot as the world's largest market for Scotch whiskey exports from France.

India has the second-largest spirits market and the third-largest alcoholic beverage market in the world. With a predicted CAGR of 7.7 percent from 2025 to 2032, the market is valued at $52.4 billion.

Considering that Scotch whiskey only makes up 2.5% of the whisky market overall, it is likely that the impact of the tariff drop would primarily affect the premium market.

Similarly, it is indicated that the FTA's duty-free quota will have little effect on cars. Only a few thousand EVs are eligible for duty-free status. According to an official, EVs will not have their out-of-quota duty reduced.