India and European Union to Discuss Whisky Maturation Period in FTA Working Group

India and the European Union (EU) have agreed to address the whisky maturation period in a working group under their free trade agreement (FTA). This issue is crucial for Indian alcoholic beverage producers. An official stated that the EU should reconsider its three-year maturation requirement for Indian whiskies. In India's warm climate, whisky matures 3-3.5 times faster than in Europe.

Representative image

The Confederation of Indian Alcoholic Beverage Companies (CIABC) argues that Indian whiskies should be accepted in the EU regardless of whether they are made from malt, grain spirits, or molasses-based spirits. They believe that Indian recipes should be recognised just as India accepts European or British whisky recipes. The commerce ministry official mentioned that a working group on wines and spirits has been established under the agreement.

Trade Agreement Details and Duty Reductions

The FTA negotiations between India and the EU concluded on Tuesday, with expectations for signing and implementation within this year. Currently, India imposes a 150% import duty on alcoholic beverages. However, under the new agreement, European wines will enter the Indian market at reduced prices due to import duty concessions.

Wines currently make up less than 1% of India's alcoholic beverage market. The pact includes gradual and selective duty reductions on wines. No duty cuts will apply to wines priced below 2.5 euros to protect domestic wine producers and grape farmers in regions like Maharashtra's Nashik and Karnataka.

Impact on Domestic Wine Industry

For wines priced between 2.5 euros and 10 euros, duties will decrease to 30% over seven years. Wines priced above 10 euros will see duties reduced to 20%. This approach provides the domestic sector with time to grow, innovate, and improve global competitiveness, according to an official.

Additionally, Indian wine will gain preferential market access under the pact. Customs duties will drop from up to 32 euros per hectolitre (approximately 100 litres) to zero. This reduction will occur either immediately or gradually over three to seven years after the pact's implementation.

Working Group's Role in Whisky Maturation

The working group will focus on exchanging information, knowledge, and best practices regarding whisky maturation periods. The maturation period varies across geographies; India's is shorter while the EU's is longer for spirits. The group aims to address these differences collaboratively.

The official highlighted that discussions around maturity are essential due to these geographical variations. The goal is to find common ground that respects both regions' practices while fostering mutual understanding and cooperation in the spirits industry.

This agreement marks a significant step towards enhancing trade relations between India and the EU. By addressing key issues like whisky maturation and wine duties, both parties aim to create a more balanced and mutually beneficial trade environment.

With inputs from PTI