Scottish producers face an “alarming predicament” if they are hit with additional costs sending their goods to India.
The UK and India are locked in negotiations to agree a trade deal within the next few weeks, which could have wider implications for the whisky industry.
There are already long-standing 150% tariffs on imported whisky to India, which the UK government hopes to see reduced as a result of any trade deal.
However, there are reports the Indian government is now threatening to introduce a 15% tariff on 22 British goods, including whisky and gin.
This is understood to be in retaliation against safeguards put in place by the UK government to protect its domestic steel industry.
The Scottish Whisky Association say a 15% additional tariff would “undercut” progress on the negotiations so far.
‘World’s largest market’
India is the world’s largest market for whisky and more than 136 million bottles of Single Malt were exported to the country last year.
Scottish whisky accounts for only 2% of the Indian market due to the 150% tariff which means it is significantly more expensive to buy Scotch over Indian whiskies.
A total of 70% of the gin produced in the UK comes from Scottish distilleries with UK gin exports exceeding £2.5 billion.
Highland MP Drew Hendry has written to UK Trade Secretary Kemi Badenoch to express his “deep concern” at reports of increased tariffs on Scottish producers.
He said the only way to protect Scotland’s exports is “through independence and re-joining the EU and single market”.
“Scotland’s exporters are already contending with the consequences of the pandemic, the UK’s trade war with the EU, and are only just recovering from the 25% tariffs imposed by the Trump administration”, Mr Hendry added.
“It is therefore an alarming predicament for Scottish producers if they are slapped with yet more costs by a key partner like India.”
Ian McKendrick, International Director for the Scottish Whisky Association, said: “It is disappointing to learn that the Indian government has announced that it may impose a 15% counterbalancing tariff on a range of UK products in response to UK safeguard measures on Indian steel.
“This includes bottled Scotch Whisky in what continues to be a crucial market for our industry and our second largest for exports by volume.”
He said considerable progress has been made by both sides to improve conditions for exporters.
“A 15% additional tariff would only serve to undercut this progress,” he added.
A spokesman for the Department for International Trade said: “We’ve secured great wins for Scottish whisky and gin producers.
“Our new trade deals with Australia and New Zealand have removed 5% tariffs, and a resolution of the Airbus-Boeing dispute has stopped harmful 25% tariffs against Scotch Whisky.
“Earlier this year the government took steps to protect its vital UK steel sector by extending steel tariffs.
“The UK has a strong trading relationship with India. Although they have not implemented any rebalancing measures, we remain in discussions with our Indian friends and partners on this issue.”
Conversation