Export of India-made spirits expected to surpass USD 1 billion mark

The export of Indian-made spirits is poised to surge beyond the USD 1 billion mark in the coming years, driven by a robust demand for these beverages in the global market. Rajesh Agrawal, Additional Secretary at the Ministry of Commerce, highlighted this projection on Thursday, emphasizing the accelerating popularity of Indian-made spirits worldwide.

In 2022-23, the export value of Indian spirits reached USD 325 million, and with the escalating global demand, experts anticipate this figure to surpass USD 1 billion in the near future.

Speaking on the subject, Agrawal stated, "Global market of alcoholic beverages stands today at USD 130 billion and Indian exports of these products was USD 325 million in 2022-23. As the global demand for Indian spirits is growing, we expect that in a few years, exports of Indian spirits will cross USD 1 billion. In our negotiations for a free trade agreement with the countries we are trying to get duty concessions for Indian spirits".

Negotiations for free trade agreements (FTAs) play a crucial role in facilitating the growth of Indian spirits exports.

Agrawal noted, "The world trade in the segment is dominated by scotch which is around USD 13 billion. The condition for scotch is that it must be matured for a period of three years and in our FTA negotiations it has not been resolved yet. As per the Indian alcohol and beverage industry Indian climate is warm and here whiskey matured in one year. That is the issue we are trying to negotiate and resolve in our FTAs.

"Agrawal said, "Law in many countries prohibits the one-year maturity period but some countries have their own standards. Recently Confederation of India Alcoholic Beverage Companies (CIABC) has sought better market access for Indian products in the EU. CIABC, the apex body of Indian alcoholic beverage manufacturers, has demanded that the EU should remove the non-tariff barriers which prevent the vast majority of Indian products being sold in the EU".

"CIABC, hitch has been constantly raising its concerns with the government on the matter, has also reiterated that the trade deal with the EU on alcoholic beverages should be no different from the UK, negotiations for which are currently underway. In discussions about the global alcohol and beverage industry, Agrawal highlighted the dominance of Scotch, which commands a market worth around USD 13 billion", said Agrawal.

Recently, the Confederation of Indian Alcoholic Beverage Companies (CIABC) has been actively advocating for improved market access for Indian products in the European Union (EU).

CIABC, representing Indian alcoholic beverage manufacturers, has urged the EU to eliminate non-tariff barriers hindering the entry of most Indian products into the EU market.

CIABC has emphasized that the trade deal with the EU on alcoholic beverages should mirror the one negotiated with the UK.

CIABC Director General Vinod Giri stressed the need for the EU to reconsider regulations to ensure a fair and mutually beneficial trade agreement between India and the EU.

"The most notable is the condition that for a product to qualify as a whisky, it must be matured for a period not less than three years [Sub Para 2(a)(iii) of Annex 1 of Regulation (EU) 2019/787], and for brandy for one year [Sub Para 5(a)(ii) of Annex 1 of Regulation(EU) 2019/787]," said CIABC Director General, Vinod Giri.

"It has been highlighted several times, along with scientific substantiations, that such long maturation is not applicable under warm Indian climate. We believe that it is effectively a non-tariff barrier since long maturation increases the cost of Indian products by 30-40 per cent as spirit evaporates 10-15 per cent every year under Indian climate (compared to 1-2 per cent in Europe) and the cost of capital deployed during maturation (8-10% per annum in India compared to 2-3 per cent for Europe). We firmly believe that if the EU does not repeal the law pertaining to the maturation, any trade agreement will be one-sided favouring only the EU and will do nothing for the Indian industry," he added.