Indo-US interim trade deal set to lift American whiskey sales in India

India and the United States have reached a framework for an interim trade agreement that is expected to significantly lower or eliminate tariffs on a range of American goods, including wines and spirits. The move is likely to boost U.S. whiskey sales, particularly bourbon, by improving access to the Indian market, one of the world’s largest and fastest-growing whiskey markets.

As of February 2026, the proposed agreement aims to roll back historically high import duties on U.S. spirits, which have long constrained exports. Potential reductions could bring tariffs down sharply from levels as high as 150%, creating new opportunities for American producers.

Announcing the framework, both governments said the agreement would reduce import duties on several product categories to enhance two-way trade. The spirits sector is among the key beneficiaries.

Welcoming the development, Distilled Spirits Council President and CEO Chris Swonger said last year’s tariff reduction on U.S. spirits imports into India had been an important first step.

“It opened new opportunities for Bourbon producers in the world’s largest whiskey market. With India now reaching agreements with the EU and the UK to significantly reduce tariffs on their spirits, we are hopeful that this new U.S.–India agreement will secure comparable tariff reductions across all categories of U.S. distilled spirits, ensuring fair and competitive access to the Indian marketplace,” Swonger said.

India imported wines worth $26 million in 2024-25, largely from Australia, Singapore, France and Italy. Spirit and liquor imports stood at about $600 million during the last fiscal year, with major sourcing from the UK, Singapore, the UAE, Ireland and the U.S. Currently, India levies import duties of up to 150% on various alcoholic beverages, including bourbon, Scotch whisky, rum, gin, vodka and tequila.

However, the proposed tariff cuts have triggered concerns within the domestic alcoholic beverage industry. The Confederation of Indian Alcoholic Beverage Companies (CIABC) has raised alarms over the cumulative impact of recent trade agreements with the U.S., EU and the UK, all of which envisage substantial duty reductions on imported wines and spirits.

While CIABC is not opposed to lowering import duties, it has called for a phased approach and the removal of non-tariff barriers to ensure a “fair and level-playing field” for Indian producers.

The interim trade agreement with the U.S., announced on February 7, 2026, follows similar pacts with the EU and the UK. Under the EU agreement, tariffs on premium wines will be cut to 20%, spirits to 40%, and beer to 50%, from earlier peaks of 150% and 110%.

The India-UK Free Trade Agreement a phased reduction in duties on Scotch whisky from 75% initially to 40% over ten years. Earlier, on February 13, 2025, India had reduced import duty on bourbon whiskey from 150% to 100%.

CIABC argues that Indian spirit makers already face structural disadvantages, including higher capital and operating costs and fragmented, state-level licensing regimes. The association has also pointed out that Imported Bottled-in-Origin (BIO) spirits enjoy more favourable tax structures in some states, further weakening the competitiveness of domestic brands.

Any reduction in customs duties, CIABC warns, could be compounded by these state-level concessions, creating a “double whammy” for Indian producers across spirits and wine categories. The body has urged state governments to withdraw excise concessions extended to imported liquor to offset the impact.

Despite these concerns, India’s alcoholic beverage market is expected to see strong growth, driven by a young demographic and a clear trend towards premiumisation. The high-margin Prestige & Above segment is expanding rapidly, with white spirits such as vodka and gin showing robust growth.

Ironically, these fast-growing premium categories are also the ones most exposed to rising foreign competition following tariff cuts. Industry observers say domestic players will need to focus on quality, brand building and supply-chain efficiency rather than rely on tariff protection.

CIABC has also sought safeguards against dumping and greater market access for Indian alcoholic beverage exports, underscoring the need for regulatory reforms that move in step with India’s evolving trade commitments.