The chief executive of the Scotch Whisky Association has declared the forthcoming Budget will be the “first big test” of the UK Governments’ commitment to the industry, as he underlined the “transformational” potential of the Indian market for distillers.

Mark Kent was speaking as new figures from the organisation revealed a sharp fall in Scotch whisky exports in the first half of the year, amid challenging global economic conditions. The value of exports tumbled by 18% or £463.2 million to £2.1 billion compared with the six months of last year, with only India recording a rise among the top five markets.

In an interview with The Herald, Mr Kent said “I don’t think it came as a massive surprise” to the industry that exports had fallen in the first half, given the well-documented geopolitical and economic turmoil in key markets such as China, which saw a 42.4% fall in the value of shipments to £77.9m.

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But while he said the long-term prospects for the industry remain positive, Mr Kent declared it “just reminds people, including the Government, that you can’t take the industry for granted”.

The SWA is campaigning hard for Sir Keir Starmer’s Government to ease the duty burden on Scotch whisky, which it said had been “damaged” by the Conservative administration’s decision to hike duty by 10.1% in August last year.

Asked what the industry would regard to be a positive outcome from the Budget on October 30, Mr Kent replied: “We obviously know that the Government is concerned about public finances. But, [if] you look at what happened with the previous government, [a] 10.1% increase [in duty] really had an effect on everybody. It had an effect on our industry. It is a massive increase and that meant we weren’t able to invest as we would normally have done… and it affects jobs. Also, it to led to less income for the Treasury and you probably have seen the statistics which meant [they] put up the rate and got less tax.

“It was devastating and an act of self-harm on behalf of the [last] government. We are looking to put that right.”

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Mr Kent added that the rate of whisky duty in the UK was the highest in the G7 group of nations and the fourth-highest in the European Union, as well as being higher than for beer and cider.

“For a Government which is saying it wants to support Scotland, it wants to promote Brand Scotland, with 70% of spirits being produced in Scotland, that is an issue," he said. "So we are calling on the Government to look at the system again.”

Mr Kent said the SWA has had an “encouraging” level of engagement with UK Government officials since Labour came to power in July, but observed that the “first big test we are going to see will be how they are going to deal with the Budget at the end of October”.

While the industry saw a relatively broad-based decline in exports over the first half, it was encouraged by its performance in India. With its burgeoning population, economic growth, and emerging middle class, India has emerged as the great long-term hope for Scotch whisky distillers. That is why the industry is keen to support the Government in its bid to secure a free-trade deal with the country. Currently, whisky exports to India are subject to import tariffs of 150%.

Asked if the new Government has the same degree of appetite for a deal with India as its predecessor, Mr Kent said it is “keen to push ahead with the programme of free-trade agreements, and India is part of that. They understand the importance of India to the Scotch whisky industry, and they understand therefore the importance of it to Scotland and their agenda here”.

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The SWA has also emphasised this week the damage caused by the 25% import tariff levied on single malt Scotch whisky by the Trump administration between October 2019 and March 2021, noting that it cost the industry £600m in lost exports and market share. Trump has once again pledged to impose universal tariffs should he be re-elected in November.

Mr Kent said the SWA was working closely with its counterparts in the US whiskey industry to communicate the message that it is “good for consumers and industry on both sides of the Atlantic that we continue to have tariff-free trade”.

The US remains the Scotch whisky industry’s most lucrative export to market, although exports dipped by 3.5% to £421.4m in the first half.

Asked if the industry was seeing any signs of improvement in key markets, Mr Kent said: “Let’s look at it in context. It is a challenging time, but if you look at these H1 figures there are still the fourth-best we have ever had. The overall trend is one of growth.

“We are a product which appeals to growing middle classes with disposable income, it is aspirational. And if you look at the figures, although the headline is that there was a fall, India remains the bright spot. It continues to grow, [and] it is the biggest whisky market in the world, which comes back again to the potential for the industry should we get this free-trade agreement agreed.

“The potential is such that, at the moment, even without a free-trade agreement, we have 2.7% of the market, [a] very big market with the potential for growth. So if we get the right terms in there it could be transformational and lead to far more investment in jobs in Scotland and the wider UK.”