India-UK FTA: New Delhi might reconsider Scotch whisky tariff cuts
What's the story
India has warned that it may reconsider major concessions under the India-UK Free Trade Agreement (FTA), including tariff cuts on Scotch whisky. The warning comes amid concerns over Britain's steel import restrictions and proposed carbon tax. The dispute could delay the implementation of a trade pact aimed at boosting bilateral commerce between the two countries.
Tensions
What are the concerns?
India has warned that concessions given to British goods under the India-UK Comprehensive Economic and Trade Agreement (CETA), including duty cuts on Scotch whisky and gin, may not be automatically implemented if London goes ahead with measures that could restrict access for Indian exports. The warning comes ahead of talks between Commerce and Industry Minister Piyush Goyal and British Trade Secretary Peter Kyle.
Trade barriers
UK's defense of steel import restrictions
The UK has defended its steel import restrictions, saying they are needed to protect domestic producers from a surge in cheap imports and tackle the problem of global steel overcapacity. The new regime will come into effect from July 1, 2026, drastically cutting tariff-free quotas for foreign steel. Exceeding these quotas will attract a 50% duty, which experts say could severely impact the viability of steel exports to the UK.
Export impact
India's steel exports to the UK
India's steel exports to the UK were worth around $897.68 million in FY26, a significant part of its total merchandise trade with the country. New Delhi has said such restrictions create uncertainty for exporters just as businesses are gearing up for the implementation of FTA. Brazil, Turkey, Japan, South Korea, Switzerland and Australia have also raised concerns at WTO over Britain's safeguard measures.
Tariff negotiations
A look at Scotch whisky industry
The Scotch whisky industry had long campaigned for greater access to the Indian market, where imported alcoholic drinks face some of the highest tariff barriers in the world. Currently, Scotch whisky attracts a basic customs duty of 150%. Under CETA, India had agreed to cut import duties on UK whisky and gin from 150% to 75% when the agreement comes into force. The tariffs would then gradually decline until reaching 40% in the 10th year of implementation.
Concerns
What about Carbon Border Adjustment Mechanism?
The UK plans to bring a Carbon Border Adjustment Mechanism from January 2027, similar to measures being introduced by the European Union. It would impose a carbon-related charge on imports of emissions-intensive goods such as iron, steel, aluminum, fertilizer, hydrogen, ceramics, glass and cement. Indian officials fear that these measures could offset some of the benefits negotiated under the free trade agreement.