On May 7, shares of several Indian liquor companies dropped by up to 5% after India and the United Kingdom signed a long-awaited Free Trade Agreement (FTA). The agreement, signed on May 6, includes a major change in alcohol import duties. Import tax on Scotch whisky and gin, which was 150%, will be cut to 75% immediately and further reduced to 40% over ten years.
The market reacted quickly. Som Distilleries share price fell 3.3% to a low of ₹128.43 at 2:05 PM on the NSE. Radico Khaitan, which had earlier reached a 52-week high of ₹2,665, dropped by 3.44% to ₹2,449.90. This fall came after two strong trading sessions.
Other liquor firms also saw declines. Tilaknagar Industries, known for brands like Mansion House, dropped 1.15% to ₹278.30. Globus Spirits fell 1.11% to ₹974.50, and PiccadilyAgro fell over 2.74% to ₹278.00.
The Indian liquor industry is worried. Companies had expected a more gradual reduction in duties—from 150% to 100% in the first year and down to 50% over ten years. The steep cut to 75% immediately left many disappointed, causing an abrupt fall in share prices.
As per news reports, the FTA will have the biggest impact on premium and super-premium segments of the Indian-made foreign liquor (IMFL) market. With import duties dropping sharply, international whisky and gin brands will become more affordable to Indian consumers. This could lead to reduced demand for high-end Indian brands, forcing companies to rethink their pricing strategies.
Radico Khaitan, which earns around 10% of its IMFL revenue from the super-premium segment, may face challenges in maintaining its market share. As per news reports, Indian brands will now have to focus more on product innovation, branding, and quality to stay competitive.
The India-UK FTA has caused a shake-up in the liquor market. While some firms may benefit from cheaper raw materials, the threat of increased competition is making investors and industry leaders nervous.
Read more on: India-UK Trade Deal Boosts Indian Textile Companies
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
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Published on: May 7, 2025, 2:23 PM IST
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