A Scotch bargain

1 min read . Updated: 11 Mar 2021, 11:25 PM IST Livemin

If a duty cut can serve as a bargaining chip for a trade deal, one that post-Brexit London might be especially keen on, then we should use it to obtain a concession or two of our own

With negotiations underway between India and the UK on a free trade agreement, the latter is reported to be pressing for a tariff concession on our imports of Scotch whisky. The British want India’s import duty on it to be slashed sharply from its current level of 150%.

One need not be a fan of this spirit distilled in Scotland to acknowledge that our levy on its entry is too high. To be sure, it’s not prohibitively so, as a peek into a liquor cabinet in a well-off home would confirm. In fact, its domestic demand is relatively price-inelastic, which makes it an ideal target for a customs squeeze. If a duty cut can serve as a bargaining chip for a trade deal, one that post-Brexit London might be especially keen on, then we should use it to obtain a concession or two of our own. It’s highly unlikely that locally-distilled whisky brands would suffer from a gush of Scotch inflows, as their market among India’s price-sensitive drinkers, who account for the vast bulk of local volumes, is secure and, the extra imports that would sell here if Scotch retail prices were to halve, say, will be modest at best. We have little to lose in dropping this barrier and perhaps much to gain.