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Source: The post is based on the article “India, Australia explore easing whiskey exports, form group” published in Live Mint on 22nd July 2023.
Syllabus: GS 2 – International Relations
Relevance: About India Australia mutual recognition agreement (MRA).
News: Recently, India and Australia have formed a joint working group to consider the possibility of a mutual recognition agreement (MRA).
What is mutual recognition agreement (MRA) about?
The agreement would help Indian whiskey makers to get into the Australian market, which has a significant Indian population and growth opportunity.
The formation of the group comes after Australia got duty-free access for its high-end wines under the Economic Cooperation and Partnership Agreement (ECTA), between India and Australia.
Why was MRA needed?
Currently, Australian rules require the spirit to be matured for two years before it can be labelled whiskey and one year for rum. However, this rule acts as a disadvantage for Indian liquor exporters as India does not have such rules.
Further, Indian companies claim that spirits mature faster in India’s warmer climate, and the maturation rule restricts their access to a market with a large Indian population and good growth potential.
Companies also claim that a two-year maturation in India will cause a 10% loss due to evaporation. Therefore, due to these differences, a joint working group has been formed to look into the issue and find a way out.
Moreover, the Indian liquor industry is pushing for similar relaxations in the UK, where the minimum maturation period is three years.
What is the way ahead?
India is fast emerging as a producer of high-quality liquor, including single malt whiskies.
Therefore, if maturation rules are eased in the UK, Canada, and Australia, it can create substantial market opportunities for Indian producers due to the significant Indian diaspora in these countries.
