India emerges as global growth engine for alcohol industry

India’s alcohol market is a rapidly expanding sector, driven by a youthful and urbanising population, rising disposable incomes, and a strong shift towards premiumisation. Projections indicate significant value growth, with the market expected to reach between $120 billion and $200 billion by the mid-2030s.

Younger consumers are increasingly prioritising quality spirits such as whisky and rum over lower-end options, positioning India as a key global growth market for alcoholic beverages.

The market is dominated by Indian-made spirits (IMIL and IMFL) and beer, with spirits, particularly whisky, brandy and rum, accounting for the bulk of consumption. Alongside this, demand for premium and imported brands is steadily rising.

Forecasts suggest overall industry growth of 5.8% to over 7%, with some estimates pointing to even faster expansion in premium segments. India has emerged as one of the largest contributors to global alcohol consumption growth and has ranked among the fastest-growing alcohol markets in recent years.

The Indian alcobev industry is now the world’s third-largest, underpinned by rising incomes, urbanisation and growing Gen Z demand. While premiumisation remains the defining trend, the sector continues to operate under a highly regulated framework with state-specific rules and high taxation.

Spirits dominate the market, with whisky leading consumption. Despite regulatory challenges, the industry generates substantial revenue for state governments and provides significant employment. Major players include United Spirits, Pernod Ricard and Bira 91, among others.

Exports and Key Markets

In FY24, India’s alcoholic beverage exports rose to $375 million, marking an increase over the previous year. In FY25, the United Arab Emirates emerged as the leading destination, with exports valued at over $115 million, followed by Singapore at more than $29 million. A significant share of India’s alcobev exports is directed towards the UAE, making it a critical overseas market for Indian producers.

Consumption Patterns

Alcohol consumption in India varies widely due to regional social norms and state-level legal restrictions. In 2024, per capita alcohol consumption was estimated at over five litres of pure alcohol.

States such as Arunachal Pradesh, Telangana and Sikkim reported higher levels of alcohol consumption among men, while Arunachal Pradesh and Sikkim also recorded the highest consumption levels among women, highlighting distinct demographic and regional patterns.

Trade Agreements and Industry Impact

The proposed India–EU Free Trade Agreement (FTA), along with similar agreements such as the India–UK FTA and India–EFTA pact, is expected to significantly reshape the Indian alcobev industry.

These agreements could lead to lower import duties, increased competition, new export opportunities for Indian manufacturers and improved access to high-quality imports.

At a time of rising global trade protectionism, free trade negotiations between India and the European Union have accelerated. Whether the two sides can conclude a deal by the end of the year is being closely watched as a test of India’s trade openness and the EU’s external strategy.

The wine industry, in particular, has much at stake, as India’s steep import tariffs, currently as high as 150%, have long constrained market expansion.

An EU senior official said talks on the FTA have reached a decisive stage, with earlier EU statements indicating that the agreement could result in substantial tariff reductions on European wines.

Wine Market Outlook

With a population of 1.4 billion, India has emerged as one of the fastest-growing wine markets globally. According to official data, India imported 2.58 million litres of wine worth $12.55 million in the first half of 2025, reflecting a 50.3% rise in volume and a 20.9% increase in value year-on-year.

However, high tariffs remain a major barrier. Wine imports face federal duties of up to 150%, in addition to state-level taxes, limiting broader penetration.

The impact of tariff reductions is already evident in the case of Australia, which has become India’s top wine supplier following the Australia–India Economic Cooperation and Trade Agreement (ECTA). In the first half of 2025, Australia exported 1.01 million litres of wine worth $3.37 million to India, accounting for 38.9% of import volumes and 26.9% of import value.

Under the ECTA, tariffs on wines priced above $15 have been reduced to 75% and will fall to 25% by 2032. For wines priced between $5 and $15, tariffs were cut to 100% in 2022 and will decline further to 50% by 2032.

India’s commerce ministry said wine imports from EU countries totaled USD 4.05 million in the first half of 2025, up 4% year-on-year, slightly higher than imports from Australia. Industry observers believe that further reductions in tariffs and non-tariff barriers could unlock significant growth for European wines in India’s expanding market.