Scotch Whisky Industry Pivots to India as US Tariffs Create Headwinds
Scotch whisky producers faced significant challenges in the United States market during 2025, with new figures revealing a notable decline in exports following the imposition of tariffs by the Trump administration. According to data released last week by the Scotch Whisky Association (SWA), the value of Scotch exports to the US dropped by four per cent in 2025, while volume exports fell by just over nine per cent compared to the previous year.
US Market Turbulence and Looming Tariff Threats
The decline was particularly sharp between May and December 2025, after former President Donald Trump implemented a ten per cent tariff on all foreign imports in April of that year. During this period, Scotch exports to the US plummeted by seven per cent in value and fifteen per cent in volume. Mark Kent, chief executive of the SWA, acknowledged that "tariffs and geo-political tension" had created "significant turbulence in some key markets."
Distilleries may encounter further pressure on US sales later this year when a five-year suspension of a twenty-five per cent tariff on single malt whiskies is scheduled to expire. This additional tariff, originally levied between October 2019 and March 2021 due to a dispute over subsidies between Airbus and Boeing, would increase the overall tariff rate to thirty-five per cent if reinstated.
India Emerges as Strategic Growth Market
While US markets present ongoing challenges, Scotch makers have identified India as a promising growth opportunity. The value of Scotch exports to India surged by fifteen per cent in 2025, reaching £286 million. Although the US remains the largest Scotch market by value, India dominates in terms of total consumption, importing 220 million bottles annually. France follows as a distant second with 152 million bottles.
The growing Indian middle class is expected to drive continued rapid expansion of the Scotch market, especially with the UK-India trade deal set to take effect later this year. As part of this agreement, tariffs on whisky will be reduced from 150 per cent to 75 per cent starting in April, with plans to further decrease them to 40 per cent after ten years.
Currently, Scotch constitutes just three per cent of the Indian whisky market, but the SWA projects this could double to six per cent as a result of the trade deal, potentially boosting the UK economy by £1 billion over five years.
Industry Response and Market Positioning
Achyuth Anil, a researcher at the Centre for Inclusive Trade Policy, noted that Indian consumers are likely drawn to Scotch's premium reputation. "Scotch has been the premiere whisky in India for a while, going back to colonial times. It's just that it's not been accessible to a majority of the market," he explained.
Major companies have already begun targeting the Indian market. Diageo, which owns brands including Johnny Walker and Talisker, stated that tariff reductions would enable price reductions for consumers. Nik Jhangiani, Diageo's finance chief, indicated on an earnings call last summer that this could lead to "a high single-digit decrease in consumer prices" and a similar increase in volumes.
The Artisanal Spirits Company, a listed firm specializing in premium whiskies for members, announced franchise deals in India just one month after the trade deal was signed. Although initially expected to deliver "marginal returns," the company is positioning itself for the "long-term opportunity" in India, with chief executive Andrew Dane describing the potential as "significant for the wider industry."
Competitive Challenges in the Indian Landscape
Scotch producers will not have an easy path in India, where domestic distilleries have been increasing production of single malts—traditionally the most premium variety. According to the Confederation of Indian Alcoholic Beverage Companies, domestically produced single malts accounted for 53 per cent of the market in 2023, up from just 15 per cent in 2017.
Leading Indian brands such as Amrut and Paul John have garnered global awards, building what analysts Duncan McFadzean and Martin Purvis of Commercial Spirits Intelligence describe as "the premiumisation narrative that Scotch hopes to exploit."
Indian distilleries also benefit from a tropical climate that accelerates the aging process—one year in India can equal three years in Scotland—allowing for faster inventory turnover. However, Scotch exporters must navigate India's complex tax environment, which McFadzean and Purvis note consists of "28+ distinct markets, each with its own excise system, licensing requirements, and regulatory quirks."
Achyuth Anil highlighted the unpredictability of tax changes, stating that "some of these prohibitions or restrictions seem to be haphazard or brought on quite quickly, rather than with a consistent policy objective in mind."
While the UK-India trade deal offers substantial long-term potential for Scotch exporters, the industry must prepare for a competitive and regulatory landscape that presents both opportunities and challenges ahead.
