India’s Scotch whisky row as firms seek 75% duty instead of 150%

India’s trade agreement with the UK reduced import duty on eligible Scotch whisky from 150% to 75%. However, Indian revenue investigators argue that bulk Scotch concentrates imported from Britain are not covered by the concession. They say these shipments should still face the full 150% duty.

The companies and their industry association take the opposite view. Diageo and Pernod Ricard import bulk Scotch concentrates, then blend them with other ingredients to make Indian-market brands. Their association, ISWAI, says the concentrates should receive the lower tariff under the agreement. The disagreement is therefore about customs interpretation, not the tariff rates themselves.

The investigation remains open, and wrongdoing has not been established. ISWAI has asked the commerce minister for urgent clarification. If the higher duty applies, the companies could lose much of the expected commercial benefit from the India–UK deal, while uncertainty could disrupt business planning.

Bulk Scotch whisky concentrates are imported Scotch-based materials shipped in large quantities from Britain. The article does not describe their precise ingredients or packaging. It does establish that Diageo and Pernod Ricard bring these concentrates into India for manufacturing, rather than simply selling all of them as finished imported whisky.

Inside India, the companies blend the concentrates with other ingredients. This process supports popular Indian-market brands, including Royal Stag, Blenders Pride and McDowell’s. The concentrates are therefore an input in local production. Their customs treatment matters because the companies must pay import duty before using them in that manufacturing process.

The current dispute asks whether these inputs qualify for the India–UK agreement’s reduced Scotch whisky tariff. Investigators say they should pay 150%, while the industry group representing the companies argues for 75%. The final interpretation could change production costs and the trade deal’s practical value.

Under the India–UK trade deal, eligible Scotch whisky imports moved from a 150% import duty to 75%. That is a reduction of 75 percentage points, cutting the stated rate in half. The change is intended to make British Scotch more competitive in India and improve access for British products.

The agreement also provides for another staged reduction. Over the next 10 years, the duty is planned to fall further, reaching 40%. That would mean a total reduction of 110 percentage points from the original 150% rate. The article describes these reductions as applying to eligible Scotch whisky products.

The key uncertainty is whether bulk Scotch concentrates meet that eligibility. If they do, companies could benefit from the current 75% rate and future reductions. If not, investigators’ interpretation would keep them at 150%, limiting the financial benefit that Diageo and Pernod Ricard expected from the agreement.

India’s Directorate of Revenue Intelligence is investigating Diageo and Pernod Ricard over how they classified imported bulk Scotch concentrates. The issue is whether the companies treated those imports as products eligible for the India–UK agreement’s 75% tariff instead of paying the full 150% duty. The investigation concerns customs treatment and possible underpayment of import duties.

The DRI searched the companies’ offices this month and questioned executives. The companies import bulk Scotch concentrates from Britain and use them in Indian production. That supply model makes the tariff classification financially important. A lower duty would reduce the cost of the imported inputs, while the higher rate would increase it.

The investigation is ongoing. The article explicitly states that the allegations have not been established as wrongdoing. ISWAI, which represents both companies, has asked the commerce minister to intervene and clarify the rules. The final decision could affect the companies’ costs and the trade agreement’s commercial benefits.

If bulk Scotch concentrates do not qualify for the lower tariff, Diageo and Pernod Ricard would face the full 150% import duty rather than 75%. Their cost of bringing Scotch inputs into India would therefore be higher. The difference could weaken the commercial benefit they expected from the India–UK agreement.

The concentrates are blended with other ingredients to make Royal Stag, Blenders Pride and McDowell’s. Higher import costs could raise the cost of producing these brands or reduce the companies’ margins. Companies might also review sourcing, production choices or commercial plans. The article does not state that retail prices would definitely rise, or that production would definitely fall.

The investigation is still ongoing, so the final impact is uncertain. A government clarification could confirm whether the lower rate applies. Until then, customs uncertainty may disrupt business and make it harder for the companies to estimate costs tied to their Indian-market brands.

A tariff is a charge placed on imported goods. When a trade agreement lowers that charge, importers pay less to bring products into the market. Lower costs can make goods more competitive, support greater sales and give businesses better access to consumers. This is the basic market-access benefit such agreements are designed to create.

The India–UK deal reduced the duty on eligible Scotch whisky from 150% to 75%, with a planned fall to 40% over 10 years. That reduction was intended to improve access for British products in India. For companies importing Scotch inputs, the lower charge can also reduce manufacturing costs when those inputs are used in Indian production.

The benefit depends on which goods qualify. The dispute over bulk concentrates shows that a negotiated tariff cut has practical value only if customs authorities apply it to the covered products. ISWAI says uncertainty could weaken the agreement’s intended benefit and disrupt businesses relying on the concession.

Customs classification is the process of identifying what an imported product is for tariff purposes. Authorities use that description to decide which duty rate and trade-agreement rules apply. Classification matters because different categories can carry different charges. In this dispute, that difference is especially large: 75% for eligible Scotch whisky compared with 150% under the investigators’ interpretation.

Diageo and Pernod Ricard import bulk Scotch concentrates from Britain. They blend them with other ingredients to produce brands such as Royal Stag and Blenders Pride. The companies’ industry association argues that these concentrates qualify for the lower rate. Indian revenue investigators argue they do not, so the full duty should apply.

The classification decision changes the companies’ import costs directly. It could also determine how much of the India–UK deal’s benefit reaches their business. The DRI investigation is ongoing, and the government has been asked to clarify the rules. No wrongdoing has been established.