India slashes tariff on American bourbon whisky: Move to strengthen ties

In a significant policy shift, India has reduced its tariff on American Bourbon whisky from 150% to 100%. This move comes in the wake of U.S. President Donald Trump’s criticism of India’s “unequal” import duties, especially concerning American products like alcohol.

On February 13, 2025, the Indian government issued a notification revealing that the new tariff on American Bourbon whisky would consist of a 50% basic customs duty, plus an additional 50% surcharge, bringing the total to 100%. This is a substantial reduction from the previous 150% tariff. However, it’s important to note that this change applies solely to Bourbon whisky, with other alcoholic beverages continuing to be taxed at the higher 150% rate.

Positive impact on American bourbon producers

This reduction is expected to benefit American Bourbon producers, with well-known brands like "Jim Beam" standing to gain. The move is seen as a pivotal shift in trade relations between India and the U.S., potentially easing tensions and fostering more favorable business ties.

Relief for American trade

Pratik Jain, Partner at PwC India, views this decision as a step towards improving trade relations with India’s strategic partner countries. He sees it as an effort to reduce trade barriers, particularly in sectors such as alcohol, which have been a source of contention.

India’s $35 billion alcohol market has attracted global attention, but its high import duties have long been a stumbling block for international companies. Giants like Diageo and Pernod Ricard have previously raised concerns over these tariffs, which have hindered the trade of foreign spirits in India.

India’s strategic move

Vinod Giri, Director General of the Beer Manufacturers Association of India, described the tariff reduction as a strategic step to ease tensions with the U.S. and avoid retaliatory measures. He emphasized that this decision sends a clear message to the U.S. that India is committed to fair trade practices.

Trump’s influence on Tariff policy

Donald Trump’s earlier statements about imposing broader tariffs on countries with unfair trade practices have had a significant impact on global trade policies. His administration sought to address trade imbalances and what they viewed as “unjust” tariffs on U.S. products. For Trump, these tariffs not only serve as a way to boost revenue but also as a tool to pressure other nations into more favorable trade deals.