Pouring Prosperity: Unlocking India’s Thirst For UK Spirits Under The New FTA

I. Introduction

On July 24, 2025, India and the United Kingdom signed the Comprehensive Economic and Trade Agreement (CETA) also known as the India - UK Free Trade Agreement (“FTA”). The FTA seeks to double the existing trade between the two nations by 2030, which is currently valued at approximately $56bn by granting relief across various sectors through distinct means, including amongst others reduction of tariffs for exports by each of the countries of various categories of goods to the other country, ensuring transparency and fairness in customs procedures, etc.

Pursuant to the FTA, one of the most significant changes that has garnered widespread attention is the reduction of customs duty on Scotch Whisky and Gin imported into India from the UK which will witness an immediate reduction from 150% to 75% and then further to 40% over the next 10 years. For the first year, the annual tariff reduction will be implemented on the date of entry into force of the FTA, which has been announced to be July 15, 2026, and the rate of tariffs will be reduced to 75% on such date. From January 01, 2036, the tariff rate will further be reduced to 40%.

This is a significant development in the alcobev sector of both nations and is closely aligned with a growing trend of Indian consumers shifting towards premium drinks and brands, thus, showing an inclination towards a truly global quality and experience. This trend is also reflected in the growing volume of alcohol imports to India, especially from regions such as United Kingdom, France, United States etc. India continues to be the largest market for Scotch Whisky in the world in terms of volume with imports of around 192 million bottles even as far back as 2024, which has grown to more than 200 million bottles in 2025. With these statistics and the beneficial changes proposed to be brought about by the implementation of the FTA, India is set to become one of the most attractive markets for UK exporters looking to expand into the Asian sub-continent.

However, it is important to understand that the Indian alcobev market is not an easy landscape to navigate. India has a complex legal regime with a labyrinth of regulations governing the import, export, supply, distribution, retail advertisement, and consumption of alcohol.

This article seeks to highlight key strategic legal considerations that UK exporters must take into account while structuring their entry and operations in India, including recognizing the interplay between central and state laws, developing essential insights into advertising and food safety laws of India as applicable to the alcobev sector and undertaking a dive into recent investigations against prominent alcohol stakeholders in India.

II. Legal Regime regulating Alcohol in India

India, as described under its Constitution, is a union of States. With 28 States and 8 Union Territories, India’s alcobev sector presents a uniquely dynamic challenge whilst also offering massive potential benefits in terms of expanding business and enhancing financial growth to overseas entrants to the market.

To understand the Indian legal regime, it is first important to highlight how the system is structured. India has a dual system of government, with legislative powers divided between Central and State Governments. The Constitution of India empowers the Central Government to legislate on certain subjects, whilst the State Government holds the power to legislate on various other subjects. The ‘production, manufacture, possession, transport, purchase and sale of alcohol’ is a State subject, that is, States have the authority to regulate and legislate on these specified matters when it comes to alcohol. Basis this classification of powers, each State has promulgated its own excise laws, rules, regulations etc. governing all matters related to alcohol within the State.

It is also quite important to note that the Constitution of India contains a section known as the ‘Directive Principles of State Policy’. A unique feature of these principles is that these are not mandatory for States to comply with, which means that they cannot be held liable for failing to comply with these principles. However, these principles do hold guiding and persuasive values for the States while legislating on the subjects that fall under their domain. Under the directive principles, States are placed under a duty to prohibit consumption of intoxicating drinks. In this regard, several State governments have taken various distinct measures to limit consumption of alcohol. These measures vary from complete prohibition of all activities in relation to alcohol including manufacture, distribution, sale etc. of alcohol, introduction of restrictive measures, such as, limitations/prohibitions on advertisement, ban on sale of alcohol in specific demarcated areas etc.

In exercise of its powers under the Indian Constitution and in a bid to strictly regulate all activities relating to alcohol each State has introduced separate licensing requirements for alcohol businesses to obtain relevant licenses, permits etc. basis the type of activities that they wish to undertake, for instance, there are specific licenses in each State for undertaking import, manufacture, supply etc. Each category of license is accompanied with specific compliance requirements. Whilst in some States, business activities relating to alcohol can be undertaken independently after obtaining the relevant licenses, permits and certifications, in various other States, stakeholders must operate through State Beverage Corporations, which hold the monopoly in undertaking import, supply and distribution of alcohol.

Additionally, and most importantly, India follows a unique model where alcohol is taxed separately in each State basis specific excise duties imposed by the excise authorities of such State. Typically, many States tax alcohol on a bulk per liter structure, which taxes alcohol basis the total volume of the bottle, or basis the category the alcohol falls under, such as spirits, wine, beer, or India made or foreign liquor. Recently, the State of Karnataka has implemented a new taxation model under which bottled alcoholic beverages are to be taxed based on the percentage of alcohol content, thus, reflecting a shift from the more traditional models of State regulated alcohol taxation. Accordingly, it is critical to highlight that whilst the India-UK FTA reduces the customs duty which is imposed at a central level, however, State specific excise duties continue to remain unaffected and very much in force.

Pursuant to the above, in structuring or planning business operations in India, a critical initial step is to identify the specific States in which activities will be undertaken. Entry and operations should then be strategically designed in alignment with the regulatory frameworks applicable to those jurisdictions.

III. Marketing and Advertising of Alcohol in India

(a) Restrictions under Central Legislations

India has strong laws against advertisement of alcohol, which stems from the Cable Television Network Rules, 1994 (“CTN Rules”), and which, over the course of time has made its way into various distinct forms of prohibition on alcohol advertisements. The CTN Rules impose a complete prohibition on any advertisement of alcohol, liquor, or other intoxicating substances through cable television networks. Further, the Norms for Journalistic Conduct issued by the Press Council of India also impose an explicit prohibition on publication of any advertisements which promote, directly or indirectly, any production, sale, or consumption of alcohol, wine, liquor, and other intoxicants.

Pursuant to the limitations under the CTN Rules, various alcohol companies in India had resorted to employ innovative means in order to advertise their brands. For instance, several brands used to advertise music CDs and soda water on television. This helped promote and advertise the brands, which are well known in the Indian market for selling alcoholic beverages, whilst also traversing the limitations placed by the CTN Rules.

However, under the Guidelines for Prevention of Misleading Advertisements and Endorsements of Misleading Advertisements, 2022 (“Guidelines”), this practice has been termed ‘surrogate advertising’ and has been prohibited. Surrogate advertising has been defined under the Guidelines as an advertisement for goods, products or services, whose advertising is otherwise prohibited or restricted by law, by circumventing such prohibition or restriction and portraying it as an advertisement for other goods, products or services, the advertising of which is not prohibited or restricted by law. Under the Guidelines, an advertisement would be considered to be a ‘surrogate advertisement’ if such advertisement (i) indicates, directly or indirectly, to consumers that it is an advertisement for the goods, products or services whose advertising is prohibited or restricted by law, and/or (ii) uses any brand name, logo, color, layout and presentation associated with such goods, products or services whose advertisement is prohibited or restricted by law. This squarely covers advertisements which continue to use brand logos, color schemes, musical and presentation themes associated with alcohol brands whilst showcasing the same to be an advertisement of non-alcoholic products.

However, the law creates a distinction between surrogate advertisements and legitimate brand extensions. Brand extensions have been recognized in India as a legitimate way of advertising brands that are associated with products which cannot be advertised, like alcohol and cigarettes.

For brand extensions in India, the Advertising Standards Council of India Code (“ASCI Code”) provides a definitive set of thresholds to determine whether a brand extension is legitimate or not. Under the ASCI Code, the Guidelines for Qualification of Brand Extension - Product or Service were released on November 23, 2023. The qualifying criteria under the ASCI Code for a legitimate brand extension is based on the duration of market presence of unrestricted product or service. Further, the scale and expenditure on advertising the brand extension products/services must be proportionate to the sales.

(b) Restrictions under State Legislations

The excise laws of most States in India contain specific prohibitions on various means of alcohol advertisements. It is significant to note that these legislations do not target every publication that contains reference to alcohol or alcoholic brands, but rather, the intent is to prohibit such publications that solicit consumption or use of liquor. Hence, permissible advertising methods may include editorials that, for instance, showcase the history and journey of the brand, or contain references to the whisky brand in context of how it was created, the idea behind its creation, or the way the alcohol is perceived by consumers in India/worldwide etc. Further, most of these State specific laws prohibit advertisements in published or printed form, and hence, permissible advertising methods may also include event sponsorships, tasting events, etc.

IV. Compliance with Food Safety Laws in India

Another significant aspect that requires attention is the compliance with food safety laws in India. Alcoholic beverages are included under the definition of ‘food’ under the Food Safety and Standards Act, 2006 (“FSSA”) and must satisfy the requirements as specified under the Food Safety and Standards (Alcoholic Beverages) Regulations, 2018, including requirements relating to identity/category classification, alcoholic strength, ingredients and additives, contaminants/heavy metals/harmful substances, and safety/microbiological parameters, where applicable.

Import of food products, including alcoholic beverages, cannot ordinarily be undertaken without a valid central license/authorization under the FSSA framework. An importer of alcoholic beverages is required to hold the appropriate license as per the FSSA regime as a food business operator along with an Importer-Exporter code. Accordingly, any entity proposing to import alcohol into India must ensure that it is appropriately licensed with the Food Safety and Standards Authority of India (“FSSAI”) for the relevant food business activity.

Imported alcohol is subject to FSSAI clearance at the port of entry through the Food Import Clearance System (FICS), which is integrated with India’s customs portal. Clearance involves document scrutiny, visual inspection, risk‑based sampling, and laboratory testing.

Further, the alcoholic beverages are subject to strict labelling requirements. Such labels must carry information as to the (i) the name / description of the product; (ii) the alcoholic strength; (iii) the net quantity; (iv) the name and address of the importer; (v) the country of origin; (vi) the relevant batch / lot / code identification; (vii) the applicable date declarations, such as date of manufacture / packing or best before / expiry, where required under the relevant framework etc. Additionally, the labels must carry warnings highlighting that alcohol consumption may be injurious to health. Further, there may also be state specific labelling requirements for different types of alcohol.

V. Anti-competitive practices in the Indian alcohol sector

Another very important factor, which has assumed significant importance in the recent days is in relation to anti-competitive practices. Under the extant competition laws of India, any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition (“AAEC”) within India is prohibited. Whether a proposed combination leads to AAEC is assessed on a case to case basis, through consideration of factors, such as, creation of obstacles for potential competitors to enter the market, preventing viable competitors from entering the market, eliminating competition by preventing entry into the market, accruing customer compensation, fostering technological, scientific, and economic development through manufacturing, or creating advances in building, giving out, or providing services.   Any breach of competition law regulations while undertaking the business operations may lead to imposition of hefty penalties by the Competition Commission of India (“CCI”). Any horizontal or vertical agreements that create adverse effects on fair competition in the market may be potentially viewed by the CCI as collusion to achieve market dominance.

Recently, various Indian alcobev stakeholders have come into the limelight for engaging in anti-competitive practices. For instance, a reputed alcohol producer is facing allegations that it colluded with retailers in the certain Indian states to exclude other market players and to achieve greater sales. Similarly, a complaint was submitted to the CCI by another stakeholder in the liquor market, alleging that the producer violated antitrust laws by offering retailers additional discounts and benefits in exchange for giving its brand approximately 70% shelf space and for not selling whisky produced by other stakeholders.  All such instances reflect the potential risks of engaging in any type of exclusionary or preferential practices in collusion with retailers, distributors or other stakeholders in the Indian market. It is recommended to seek specialist Indian counsel advice before implementing any such practices in India.

VI. Conclusion

The India-UK FTA has unveiled a once‑in‑a‑generation opportunity for UK spirits to flow into one of the world’s most dynamic markets. Yet, success will not be automatic, it must be carefully distilled through compliance, cultural sensitivity, and strategic partnerships. India’s complex regulatory landscape demands patience and precision, but for those willing to navigate its intricacies, the rewards are immense, including access to a booming middle class, a thirst for premium experiences, and the chance to embed UK brands into India’s aspirational lifestyle. In this new era, success will belong to exporters who treat the FTA not just as a tariff reduction, but as a gateway to building enduring, responsible, and resilient businesses in the heart of Asia’s fastest‑growing alcobev market.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.