India’s investigation into Scotch whisky imports by Diageo and Pernod Ricard has sparked a dispute over the India–UK trade deal, which cut import duties on eligible Scotch whisky from 150 percent to 75 percent, with a further reduction to 40 percent planned over the next 10 years.According to Reuters, the International Spirits and Wines Association of India (ISWAI), which represents the two companies, has written to the commerce minister seeking urgent intervention, warning that India’s interpretation of customs rules could prevent bulk Scotch concentrates imported from Britain from benefiting from the reduced duty.The dispute centres on whether bulk Scotch concentrates imported from Britain qualify for the lower tariff under the trade agreement.
Indian revenue investigators have maintained that the concentrates should attract the full 150 percent import duty, rather than the reduced 75 percent rate available to eligible Scotch whisky products.The Directorate of Revenue Intelligence (DRI) searched the offices of Diageo and Pernod Ricard this month and questioned executives as part of an investigation into whether the companies misclassified imports to benefit from lower duties.
The investigation is ongoing, and the allegations have not been established as wrongdoing.The industry group has warned that the interpretation could undermine a key benefit negotiated under the India–UK agreement. The tariff reduction was intended to improve market access for British products, including Scotch whisky, but the dispute has raised questions over which imported products qualify for the concession.Diageo and Pernod Ricard import bulk Scotch concentrates from Britain and blend them with other ingredients to manufacture popular Indian-market brands, including Royal Stag, Blenders Pride and McDowell’s. The outcome of the investigation could affect the companies’ import costs and the commercial benefits they expected from the trade deal.The dispute has implications for India’s alcohol industry, valued at around $65 billion.
Britain accounts for almost 75 percent of India’s imported spirits, primarily driven by Scotch whisky, according to Crisil Ratings.ISWAI has called for urgent clarification from the government to ensure that the tariff benefits agreed under the trade deal can be implemented as intended. The association has argued that uncertainty over customs classification could disrupt businesses and weaken the practical value of the agreement.