India Slashes Bourbon Whiskey Tariffs from 150% to 50%

India has made a big move by reducing the import duty on American bourbon whiskey from a staggering 150% to just 50%. This major tariff cut, announced on February 13 by the Department of Revenue, is expected to boost bourbon whiskey imports and strengthen trade ties between India and the US.

Big Tariff Cut for Bourbon Whiskey

India’s decision to lower customs duty on bourbon whiskey by 66.6% comes as a significant development in international trade. This tariff reduction was announced just hours before Indian Prime Minister Narendra Modi met US President Donald Trump for bilateral talks. Trade discussions were high on the agenda, and this move signals India's willingness to improve trade relations with the US.

While the new policy favors bourbon whiskey, other imported alcoholic beverages will still attract a 100% customs duty. Additionally, India has imposed a 50% Agricultural Infrastructure and Development Cess (AIDC) on bourbon whiskey, making the effective tax rate slightly higher than 50%.

Why Bourbon Whiskey?

Bourbon whiskey is one of America’s most famous alcoholic beverages, accounting for 25% of all whiskey imports into India. In 2023-24 alone, India imported bourbon whiskey worth USD 2.5 million. The US remains the largest exporter, contributing USD 0.75 million, followed by UAE (USD 0.54 million), Singapore (USD 0.28 million), and Italy (USD 0.23 million).

This tariff reduction is expected to make bourbon whiskey more affordable in India and increase its market demand.

Modi-Trump Talks: Strengthening Trade Relations

During a press briefing, President Trump praised Prime Minister Modi, calling him a “great leader.” When asked who is the tougher negotiator, Trump humorously admitted, “He (Modi) is a much better negotiator than me.”

Both leaders emphasized the goal of doubling trade between India and the US to USD 500 billion by 2030. The two nations also announced plans for a bilateral trade agreement to reduce duties and improve market access.

What is Bourbon Whiskey?

Bourbon is a special type of American whiskey made primarily from corn (at least 51%), giving it a mildly sweet taste. It is aged in charred oak barrels, which enhance its flavor. Similar to Scotch whiskey, which must be made in Scotland, bourbon can only be officially produced in the United States.

In 1964, the US Congress officially recognized bourbon as a “distinctive product of the United States.” Kentucky and Tennessee are the largest bourbon-producing states, home to famous brands like Jack Daniel’s, Jim Beam, Woodford Reserve, Maker’s Mark, Gentleman Jack, and Old Forester, all of which are available in India.

Impact of the Tariff Cut

1. More Affordable Bourbon: The price of bourbon whiskey in India is expected to drop significantly, making it accessible to more consumers.

2. Boost in US-India Trade: The move is a step toward stronger economic ties and a potential future trade deal.

3. Increase in Bourbon Imports: Lower tariffs will likely encourage more imports and expand the Indian whiskey market.

With this massive tariff cut, bourbon whiskey lovers in India have a reason to celebrate. It remains to be seen how this decision will impact other trade negotiations between the two nations.