JAMES BOND WALKS into an upscale bar in Delhi and orders his signature drink. “Three measures of Gordon’s gin, one of vodka, half a measure of Kina Lillet,” he says. The martini arrives. He takes a sip. Perfect. Then comes the bill—and the price leaves him shaken, not stirred.
“Imported spirits, sir,” the bartender explains.
For decades, that explanation has defined India’s wine-and-spirits market. Import tariffs of around 150 per cent—along with state-level taxes, distribution fees and other levies—meant foreign labels like Gordon’s sold at three to four times the international price. That kept them firmly to the luxury market, turning Bond’s vesper martini into a prohibitively expensive indulgence.
Until a few years ago, this high tariff wall also shielded domestic distillers from serious competition. The result: cheap liquor dominated the market, while the development of an Indian palate for finer spirits remained limited.
Paul John
This protectionist cocktail, however, is about to be decisively diluted.
The reason is India’s renewed affinity for free-trade agreements (FTAs). Since 2021, the country has signed eight such deals. Two of the most important agreements will begin to reshape the market this year.
Under the Comprehensive Economic and Trade Agreement signed with the UK last July, tariffs on British spirits will be significantly reduced starting this April. A similar trade pact with the European Union, concluded in January and expected to be implemented later this year, will ease duties on 95 per cent of traded goods, including European wine and spirits.
These agreements could usher in changes in the domestic market that go well beyond cheaper martinis.
Some domestic players—like Paul P. John, who owns the Paul John label of whiskies—are upbeat. “For Indian producers,” he said, “this is a chance to step up with confidence, and compete on merit rather than protection.” He told THE WEEK that the FTAs would “refine competition” rather than dilute it. “That ultimately benefits the consumer,” he said.
Mokksh Sani, who runs Mumbai’s largest premium liquor retail chain Living Liquidz believes the EU and the UK deals—along with the framework trade agreement with the US announced last month—could become “a structural turning point” for the domestic market. “Duty rationalisation, if implemented progressively, could make imported Scotch, European wines and American bourbons more accessible,” he said. “This would accelerate premiumisation and expand legal consumption channels.”
Premiumisation—the shift of consumers towards higher-quality, higher-priced products instead of cheaper mass-market ones—has already been a defining market trend. Industry reports show the overall alcoholic drinks market in India, which includes beer, wine, spirits and ready-to-drink beverages like seltzers and carbonated wine, grew 7 per cent in the first half of 2025. The premium segment grew faster, at 8 per cent.
Data from more than 60 Living Liquidz stores reflect this shift, says Sani. “We rely heavily on data analytics to identify micro-market trends early, whether it is the surge in agave spirits, craft gins, or evolving whisky preferences,” he said. “Premium whiskies continue to dominate, with consumers increasingly trading up for better blends and more refined profiles. In select stores, premium and super-premium categories now contribute upwards of 40 per cent of the overall revenue mix.”
One consequence of premiumisation is that Indian spirits have, in recent years, significantly improved their reputation in foreign markets. Terroir-led rums like Camikara have outperformed well-regarded Caribbean and Latin American labels, while single malts like Indri, Paul John and Amrut have been winning international awards and blind tastings.
Mokksh Sani
With premium Indian labels continuing to capture a higher share of the domestic market—partly driven by pride in Indian products—market analysts believe the chances of FTA concessions eroding the gains by Indian spirits to be slim.
According to John, consumers are no longer choosing between Indian and imported spirits “in binary terms”. “They are building a repertoire,” he said. “Brands that are disciplined about quality, and honest about what they stand for, will continue to grow, regardless of origin.”
Indian labels have also been focusing intensely on differentiated and experiential offerings—from artisanal vodka to colour-changing gins.
Sanchit Agarwal and Nidhi Kedia, cofounders of Nisaki Gin—a rice-based craft gin whose botanical mix causes it to change colour depending on the pH value of mixers—said the FTAs would push domestic producers to “sharpen quality, scale and storytelling”. But they also see an opportunity in the growing global curiosity about modern Indian brands. “With the right positioning,” Agarwal said, “this is an opportunity to export not just products, but also creativity and craftsmanship.”
Kedia believes there is growing appetite in the UK, the EU and the US markets for “craft and origin-led” spirits. The FTAs, she said, make distribution partnerships abroad far more viable.
“The opportunity lies in access,” said Anand Virmani, cofounder and master distiller at Nao Spirits & Beverages, a craft-spirits startup known for gins such as Greater Than and Hapusa. He expects the FTAs to make it easier for Indian labels to enter markets like the UK and the US.
“Outside India, the premium spirits space is already crowded, so differentiation becomes critical,” he said. “That’s where Indian spirits have an advantage; we are bringing something genuinely new in terms of ingredients, flavour profiles and stories.”
That distinctiveness is drawing global attention. In a landmark deal last July, the world’s largest spirits company, Diageo, acquired a majority stake in Nao Spirits for Rs130 crore, adding the startup to its extensive portfolio of premium labels that includes brands such as Gordon’s.
Virmani said the partnership will help Nao scale up and navigate India’s notoriously complex alcohol market, where states and Union territories maintain their own excise policies governing taxation, licensing, production and distribution.
“Doing business across multiple states today means navigating very different rules, structures and processes in each one,” he said. “That adds complexity and slows growth for everyone in the industry.”
According to Paul John, this regulatory fragmentation could ultimately shape how FTA concessions play out in practice. “In this area,” he said, “the domestic brands have a strategic advantage, as legacy players and the new imported brands will have a long road to cover.”
Sani agrees that tariff cuts alone will not translate into cheaper bottles on store-shelves overnight. “Execution will depend heavily on state policies,” he said.
Sani also owns Cartel Bros, a company that imports spirits and launches them in the domestic market while also building Indian labels. “For companies like ours, which operate both in imports and domestic brand building, the FTAs present a dual opportunity,” he said. “While we distribute and retail international labels, we also strengthen Indian-origin brands like The Glenjourneys, The Glenwalk, and Shelter 6.”
With India’s alcohol market witnessing a boom—it is projected to become the world’s fifth-largest by 2031—even prospective trade agreements are being watched closely by craft producers abroad.
“Indian consumers today are increasingly savvy,” said Thomas Vinod Xavier, cofounder of Cochin Distilleries Inc, a Toronto-based “diaspora spirits” startup known for labels such as Vanchaki vodka.
Xavier believes FTAs—including the prospective economic partnership agreement with Canada—could trigger what he calls a “reverse diaspora renaissance” in the Indian alcohol market. “For niche overseas craft labels like ours with deep Indian roots,” he said, “this is the moment when the market truly opens up—when we can bring the best of Canadian craftsmanship back to the motherland.”
As trade agreements chip away at long-standing protectionist walls, the Indian liquor market may enter a new phase—one defined less by tariffs and more by taste. A widening range of global spirits may also leave a lasting cultural shift: a generation of consumers learning to compare provenance, flavour and craftsmanship across borders. “A more informed consumer is good for everyone,” Virmani said.
For Indian distillers, the FTAs may ultimately mean something more significant than lower tariffs and higher export opportunities. It could mean more opportunities to compete with the world’s best.
“We are,” John said, “securing a seat at the table.”