New Delhi:

America’s most popular bourbon whiskey, known for its hint of sweetness, has got a sweet deal in India. Hours before PM Modi held bilateral talks with US President Donald Trump, where the two leaders discussed trade and tariffs among several issues, India slashed import duty on bourbon whiskey by as much as 66.6 per cent – effectively making it one-third the cost it is currently.

In the days and weeks leading up to the key meeting between the two global leaders, India warmed up to negotiating mega trade deals with the US by announcing significant tariff cuts on several US products as a gesture of promoting trade.

The massive drop in customs duty on bourbon whiskey – from 150 per cent to 50 per cent – was notified on February 13 by the Department of Revenue. The reduction in tariffs however, is specifically for bourbon whiskey. All other imported alcoholic beverages will continue to attract 100 per cent import duty.

American bourbon whiskey accounts for as much as one-fourth or 25 per cent of all such liquor imports in India. In 2023-24, India imported bourbon whiskey worth USD 2.5 million. The major exporting countries include the US (USD 0.75 million), UAE (USD 0.54 million), Singapore (USD 0.28 million) and Italy (USD 0.23 million).

At a press briefing at the start of his meeting with Prime Minister Narendra Modi, US President Donald Trump said “Prime Minister Modi is a great leader,” adding that “We’re going to make some wonderful trade deals for India and the US.”

The two leaders held another press conference immediately after the bilateral talks where trade for high on the agenda. On being asked by a reporter about who is a tougher negotiator, Donald Trump said, “He (PM Modi) is a much tougher negotiator than me and he is a much better negotiator than me. There is not even a contest.”

In a joint statement issued by both countries, India and the US have pledged to more than double the two-way trade to USD 500 billion by 2030 and announced plans for a bilateral trade agreement with a view to bring down duties and increase market access in both nations.

WHAT IS BOURBON WHISKEY?

Bourbon is a type of American whiskey which is made from corn. It is known for its mild sweet taste. Aged in charred oak barrels, bourbon is made with at least 51 per cent corn – this is what gives it its distinct flavour. Just like how Scotch whiskey can technically only be made in Scotland, bourbon whisky also can technically be made only in the United States.

In 1964, Bourbon was recognised by the US Congress as a “distinctive product of the United States.” The largest bourbon distillers in the United States are from the states of Kentucky and Tennessee.

Major brands of bourbon whiskey which are available in India include, Jack Daniel’s, Jim Beam, Woodford Reserve, Maker’s Mark, Gentleman Jack, and Old Forester.
 

New Delhi:

America’s most popular bourbon whiskey, known for its hint of sweetness, has got a sweet deal in India. Hours before PM Modi held bilateral talks with US President Donald Trump, where the two leaders discussed trade and tariffs among several issues, India slashed import duty on bourbon whiskey by as much as 66.6 per cent – effectively making it one-third the cost it is currently.

In the days and weeks leading up to the key meeting between the two global leaders, India warmed up to negotiating mega trade deals with the US by announcing significant tariff cuts on several US products as a gesture of promoting trade.

The massive drop in customs duty on bourbon whiskey – from 150 per cent to 50 per cent – was notified on February 13 by the Department of Revenue. The reduction in tariffs however, is specifically for bourbon whiskey. All other imported alcoholic beverages will continue to attract 100 per cent import duty.

American bourbon whiskey accounts for as much as one-fourth or 25 per cent of all such liquor imports in India. In 2023-24, India imported bourbon whiskey worth USD 2.5 million. The major exporting countries include the US (USD 0.75 million), UAE (USD 0.54 million), Singapore (USD 0.28 million) and Italy (USD 0.23 million).

At a press briefing at the start of his meeting with Prime Minister Narendra Modi, US President Donald Trump said “Prime Minister Modi is a great leader,” adding that “We’re going to make some wonderful trade deals for India and the US.”

The two leaders held another press conference immediately after the bilateral talks where trade for high on the agenda. On being asked by a reporter about who is a tougher negotiator, Donald Trump said, “He (PM Modi) is a much tougher negotiator than me and he is a much better negotiator than me. There is not even a contest.”

In a joint statement issued by both countries, India and the US have pledged to more than double the two-way trade to USD 500 billion by 2030 and announced plans for a bilateral trade agreement with a view to bring down duties and increase market access in both nations.

WHAT IS BOURBON WHISKEY?

Bourbon is a type of American whiskey which is made from corn. It is known for its mild sweet taste. Aged in charred oak barrels, bourbon is made with at least 51 per cent corn – this is what gives it its distinct flavour. Just like how Scotch whiskey can technically only be made in Scotland, bourbon whisky also can technically be made only in the United States.

In 1964, Bourbon was recognised by the US Congress as a “distinctive product of the United States.” The largest bourbon distillers in the United States are from the states of Kentucky and Tennessee.

Major brands of bourbon whiskey which are available in India include, Jack Daniel’s, Jim Beam, Woodford Reserve, Maker’s Mark, Gentleman Jack, and Old Forester.
 

Republican presidential nominee and former U.S. President Donald Trump has labelled India the ‘tariff king’
| Photo Credit: Getty Images via AFP

Former U.S. President Donald Trump’s recent claim that India is an “abuser” of import tariffs is unfair as many nations including the U.S. protect their domestic industries by imposing high customs duties on certain products, think tank GTRI said on Friday.

It said that according to WTO’s World Tariff Profiles 2023, the U.S. also imposes high duties on items like dairy products (188%); fruits and vegetables (132%); coffee, tea, cocoa and spices (53%); cereals and food preparations (193%); oilseeds, fats and oils (164%); beverages and tobacco (150%); fish and fish products (35%); minerals and metals (187%); and chemicals (56%).

These numbers demonstrate that the U.S. also protects specific products of its economy with high tariffs, GTRI said in a report.

While India does impose high tariffs on certain items, including wines and automobiles, the Global Trade Research Initiative (GTRI) argued that these figures do not represent the overall tariff landscape.

“Trump’s argument singles out products with the highest tariffs while neglecting the average and trade-weighted tariffs that better represent India’s trade policy,” he said.

On September 17, Mr. Trump called India an “abuser” of import tariffs, a claim that echoed his October 2020 statement labelling India the “Tariff King”.

“While it is true that India imposes high duties on select products, Trump’s argument overlooks essential context, making his accusations unfair,” GTRI Founder Ajay Srivastava said, adding that many nations protect domestic industries by imposing significant tariffs on certain items.

India’s average tariff rate of 17% is higher than the US’s 3.3%, but similar to other major economies like South Korea (13.4%) and China (7.5%).

It also said that India has demonstrated its openness to free trade by removing customs duties for imports from FTA (free trade agreement) partners such as ASEAN (Association of South East Asian Nations), Japan, and South Korea.

“However, despite India’s willingness, the US has been reluctant to reduce tariffs through FTAs. This hesitation is clear in the Indo-Pacific Economic Framework, where no tariff cuts were included, reflecting the US’s cautious approach,” Srivastava said.

If the U.S. is keen on zero tariff access into the Indian market, it should consider negotiating a free trade agreement with India, he added.

“While India needs serious tariff reforms, the label of ‘Tariff King’ does not hold up when compared to the tariff practices of the USA and other major economies,” he added.

Further, he said that Mr. Trump does not talk about average tariffs but singles out products with the highest tariffs charged by India.

“For example, on January 24, 2019, he said India charges a high 150% import tariff on the U.S. whiskey. Sure enough, India imposes high duties on many items. 150% on whiskey and wines 100-125% on automobiles. But India is not alone in doing so,” the GTRI said.

In reality, it said, most countries have high tariffs on a few goods such as Japan (457%), Korea (887%) and the U.S. (350%).

Explaining the realms behind these high duties, Srivastava said that most countries charge high tariffs on a few items with a reason.

“Japan may like to protect its rice farmers, the US its tobacco farmers and India its growing wine industry. Yet high tariff items do not represent the tariffs at which actual trade happens for most items. Average tariff and trade weightage tariff better represent a country’s tariff profile,” he added.

Maintaining high import duties on sensitive agricultural commodities like rice and resisting pressure to open up the domestic sector to low tariffs will be crucial for preserving India’s self-sufficiency and ensuring food security for its population, a report said on January 1.

Economic think tank GTRI (Global Trade Research Initiative) in its report said that India needs to cut its reliance on imported vegetable oils to promote better health outcomes and also reduce the import bill.

This will need educating consumers about the health benefits of using locally produced oils like mustard, groundnut, and rice bran in lieu of imported oils.

India is the world’s largest importer of vegetable oils, with imports estimated to double to $20.8 billion in 2023-24 from $10.8 billion in 2017-18.

It added that the U.S. and E.U. currently support agriculture by using the latest technology to maximise output, high tariffs (or import duties) to discourage imports and massive subsidies to push exports.

Developed and agricultural-exporting countries like Australia always push developing countries like India to cut duties and subsidies on agricultural commodities to push their exports.

India has built a high import tariff wall (30-100% on sensitive items) to check subsided imports. India also does not cut tariffs on sensitive items for even its FTA (free trade agreement) partners.

The report said that this has paid India with self-sufficiency in almost all products.

“India needs to continue with its current approach to not open the domestic agriculture sector to low tariff subsidised imports. Upholding high import tariffs on sensitive items and resisting pressure to open up the domestic agriculture sector to low-tariff subsidised imports will be crucial for preserving India’s hard-earned self-sufficiency and ensuring food security for its burgeoning population,” it said.

According to the UN’s Food and Agriculture Organisation, net cereal imports by developing countries will almost triple over the next 30 years while their net meat imports might even increase by a factor of almost five.

While most countries will be dependent on food imports, India is lucky to be self-sufficient in all agriculture and food items except vegetable oils.

India’s agricultural imports are estimated to touch $33 billion in 2023 which will be just 4.9% of total merchandise imports.

“This has become possible due to focus on policies like the green and white revolution, high import tariffs and active negotiations at the WTO (World Trade Organisation) to protect food security concerns for the 1.4 billion people over developed country pressure to open Indian agriculture to subsidised imports,” GTRI co-founder Ajay Srivastava said.

On the sugar sector, the report said that India is the world’s largest sugar exporter after Brazil, but this year, it will import sugar in vast quantities as the sugar imports are estimated to grow steeply by 385.4%, from $252 million in 2022 to $1,223.4 million in 2023.

Imports have increased in 2023 due to a decline in domestic production caused by weak rains.

India dominates the global sugar scene as the largest producer, consumer, and second-largest exporter. Its sugar industry, ranking second in agricultural-based sectors, employs millions.

“Despite this, the industry faces competitiveness challenges, relying heavily on subsidies, free power, and water, leading many times to overproduction and market volatility. Water scarcity compounds issues, threatening industry sustainability,” Mr. Srivastava said.

To thrive, the Indian sugar sector must aim to boost sugarcane yield from 55 to the global average of 70 tonnes per hectare, free from subsidies.

“Production uncertainties force frequent policy changes to keep local prices in control, but dissuading long-term investments and hindering strategic planning for future businesses,” he added.

Vegetable oil, pulses, and fresh and dry fruits account for 72.1% of agriculture imports of India in 2023. Vegetable oil is the largest import constituent, accounting for 51.9% of total agriculture imports of India.

India imports 4 types of oils: Crude Palm Oil (CPO), Soya Bean Crude Oil, Crude Sunflower Seed Oil, and Refined Bleached Deodorized (RBD) Palmolein.

The report said that imports in 2023 are set to decline by 18.6% to $17.1 billion compared to 2022, primarily due to a fall in import prices, not in quantities.

Further, it said that India’s pulses imports are expected to rise by 44% to surpass $2.7 billion in 2023 as compared to 2022.

The major pulses and import values in 2023 are Masoor (lentil) at $1.13 billion, Arhar/Tuar (pigeon peas) at $766 million, Urad (beans of vigna mungo) at $536 million, Rajma (kidney beans) at $120 million, and Kabuli Chana at $76 million.

India is the world’s largest producer and consumer of pulses. It aims to enhance domestic production and cut imports by introducing high-yielding, disease-resistant pulse varieties.

The key challenges include addressing water scarcity and mitigating market volatility issues.

“Major efforts extend to reclaiming fallow land, promoting intercropping, and focusing on rainfed areas. Also, the market and infrastructure support involve ensuring fair prices through Minimum Support Price (MSP), investing in storage and processing, and establishing direct marketing channels,” he said.