India lowers tariff on US whiskies, Stock to Watch

Shares of Indian liquor giants United Breweries and United Spirits witnessed volatility on February 17 after the Indian government announced a reduction in tariffs on U.S.-made bourbon whiskey. The decision, which brings down the total import duty on bourbon from 150% to 100%, triggered a negative reaction in liquor stocks at market opening, with shares falling up to 2%. However, the losses were later pared as investors absorbed the limited impact of the tariff cut. Despite the adjustment, all other imported alcoholic beverages remain subject to the previous 150% tax rate, ensuring that only a specific segment of U.S. liquor benefits from the tariff revision.

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The move follows mounting pressure from global liquor companies, including Diageo and Pernod Ricard, which have long argued that India’s steep import duties on foreign spirits have restricted market access. India’s alcoholic beverage market, valued at around $35 billion, has been a point of contention for international liquor brands looking to expand their footprint in one of the world’s fastest-growing consumer markets. The lowered tariff on bourbon is expected to make premium American whiskey more affordable for Indian consumers, potentially increasing competition for domestic liquor brands.

At the same time, the decision comes against the backdrop of U.S. President Donald Trump’s vocal criticism of India's high import tariffs on U.S. goods. Trump, who recently met with Indian Prime Minister Narendra Modi at the White House, has repeatedly expressed frustration over what he perceives as "unfair" trade levies imposed by India. The U.S. administration has been pushing for tariff reductions on American exports, and the revised duty on bourbon whiskey is seen as a minor concession in ongoing trade discussions. However, Trump has also warned of imposing reciprocal tariffs on countries with high duties on U.S. goods, with India being on that list. This has added to uncertainty about future trade negotiations between the two nations.

Despite the initial market reaction, shares of United Spirits and United Breweries managed to recover some of their losses. At 9:25 AM, United Spirits was trading at ₹1,353.95, while United Breweries stood at ₹2,040.50 on the NSE. Market analysts suggest that the impact of the tariff cut on Indian liquor companies will be limited in the short term, as bourbon remains a niche category within India’s broader spirits market. The majority of liquor consumption in India is still dominated by whisky and other domestic spirits, meaning the reduced duty on bourbon is unlikely to significantly disrupt local liquor sales.

Looking ahead, investors and industry experts will closely monitor any further trade policy changes that could impact India’s alcoholic beverage sector. While the tariff revision marks a small shift in India’s protectionist trade stance, broader implications for international liquor brands and domestic producers remain uncertain. The possibility of additional tariff reductions or reciprocal trade measures from the U.S. could influence stock movements in the coming months.