The term ‘blue gold’ has taken on a new meaning in the global drinks trade. For decades, it referred to water, the most precious resource in a warming world. Now, it has become the moniker for India’s rapidly expanding domestic beverages sector, a market that is reshaping supply chains and challenging UK exporters in ways that were unthinkable a generation ago.
India’s drinks industry, from traditional chai to carbonated soft drinks and craft beers, is growing at an annual rate of 8 to 10 per cent. The country’s burgeoning middle class, now numbering over 400 million, is driving demand for premium and branded beverages. This is the same demographic that has powered India’s rise as a manufacturing hub, but here the dynamic is different. Domestic producers are capturing market share with products tailored to local palates, regulatory hurdles, and a distribution network that rewards incumbency.
For UK exporters, the challenge is twofold: navigating a labyrinth of tariff and non-tariff barriers, and competing with a home-grown industry that understands the complexity of India’s 28 states and 800-plus languages. Take the example of Scotch whisky, a staple of UK exports to India. Despite a recent trade agreement that reduced tariffs from 150 per cent to 100 per cent on bottled Scotch, the cost remains prohibitive for all but the wealthiest Indian consumers. Meanwhile, Indian whisky producers, many of whom use molasses-based spirits rather than malt, are capturing the mid-market with products that cost a third of the price.
Water, the literal ‘blue gold’, is at the heart of the tension. India is a water-stressed nation, with per capita availability declining from 3,000 cubic metres in 1951 to less than 1,500 today. The drinks industry is a heavy user, and Indian regulators are increasingly scrutinising water usage and waste. UK companies, already bound by stringent environmental regulations at home, face additional compliance costs. Yet Indian producers are often exempt from such scrutiny, creating an uneven playing field.
There is also the issue of intellectual property. Indian law does not recognise geographical indications for many traditional beverages, meaning UK cider makers or gin distillers cannot protect their regional branding. This has led to Indian companies producing ‘English-style’ ciders and gins that undercut the originals, further eroding the premium market that UK exporters rely on.
But the picture is not entirely bleak. The Indian appetite for novelty and quality is genuine, and there is a niche for premium imports. The rise of mixology culture in cities like Mumbai and Bengaluru has created demand for artisanal spirits, single malt whiskies, and high-end wines. UK exporters who can navigate the regulatory maze and establish local partnerships may still find a foothold. Some are already shifting strategy, investing in domestic production joint ventures to bypass tariffs.
The real question is whether the UK government can negotiate better terms. The ongoing free trade talks between London and New Delhi are a critical window. But agreements take time, and India’s drinks industry is not waiting. It is scaling up, innovating, and lobbying for protection. As one UK trade official put it: ‘We are trying to sell umbrellas in a monsoon.’
The implications extend beyond beverages. This is a case study in how a rapidly industrialising nation can pivot from consumer to competitor, leveraging its own resources and market size. For the UK, the lesson is clear: in the world of blue gold, the hunter has become the hunted. Adaptation, not nostalgia, is the only viable strategy.
