Bulk imports of Scotch whiskey held up at Indian ports: Trade and finance ministers meet to resolve customs dispute | Today’s news
After the India-UK Free Trade Agreement (FTA) hit its first hurdle after its implementation in July 2026, the trade and finance ministries reportedly met on Wednesday to resolve the issue of a proposed 150% duty on bulk imports of Scotch whiskey by Pernod Ricard and Diageo.
ANI, citing sources, said the meeting was held to address spirits companies’ concerns over the classification of imported Scotch whisky. Representatives of both ministries discussed the matter at length and expressed hope that it would be resolved soon.
Read also | India-UK FTA faces first hurdle as 40 Pernod, Diageo Scotch containers get stuck
Controversy over bulk imports of Scotch whisky: What we know so far
The development comes after representatives of the International Spirits and Wine Association of India (ISWAI) and the Confederation of Indian Alcoholic Beverage Companies (CIABC) met Commerce Minister Rajesh Agarwal on November 2 and raised concerns over the difference in duty rates. Subsequently, customs officers held consignments belonging to several companies, including Pernod Ricard India, Diageo, Radico Khaitan and Allied Blenders and Distillers.
The industry objected to a memorandum issued by the Directorate of Revenue Intelligence (DRI) that classified imported Scotch whiskey as an alcoholic beverage concentrate rather than finished whisky. This created a dispute over the relevant HS code and duty. The issue has also been described as a technical complication in the implementation of the India-UK Free Trade Agreement.
ANI, quoting sources, said the commerce minister had assured industry representatives that the government would take a decision on the matter soon.
What is the dispute over the classification of bulk imports of Scotch whisky?
The HS code determines the applicable duty and rules. The DRI’s view is that the imported products should be classified as alcoholic beverage concentrates rather than finished Scotch whiskey as they arrive in India with a higher alcohol content and are later diluted in a domestic facility. This classification could change the duty calculation and raise questions about the accuracy of the original declarations.
The DRI states that imported concentrate has an alcohol content of 62-66%, compared to 42-46% for finished Scotch whisky. Since the two products fall under different HSN codes, the companies claim that their imports fall under a code eligible for FTA relief.
DRI officials are investigating whether some bulk imports of Scotch whiskey by companies were classified in a way that allowed them to claim lower duties under the India-UK trade agreement.
Read also | Why is India exploring imports of Pernod, Diageo Scotch in trade deal with UK?
The sources clarified that the investigation does not constitute a new tariff increase or show any wrongdoing by the companies. Instead, the authorities are examining which categories of Scottish imports are eligible for the lower rate introduced under the India-UK trade deal on 15 July 2026. Under the pact, the duty on eligible imports was reduced from 150% to 75%, effectively halving the rate.
However, the DRI argued that the reduced duty applies only to finished products, including ready-to-drink bottled scotch, and not to bulk scotch concentrates used in the production of whiskey brands.
DRI memorandum and impact on Scotch whiskey imports
Reuters recently reported that it had reviewed a confidential DRI memo dated November 4 that instructed customs officials across the country to continue applying the 150% duty on bulk Scottish imports. The notice described the importers’ claims of benefits under the trade agreement as “incorrect” and said they were concentrates or compound preparations requiring further production. It also raised the possibility of widespread and recurring revenue consequences arising from misclassification.
The classification dispute also resulted in shipments of Scotch whiskey being detained at Indian ports. Reuters reported that Pernod Ricard and Diageo each have more than 40 containers awaiting clearance, while Bacardi has five containers held up. Companies are reportedly reluctant to pay the 150% duty and a longer delay could disrupt supplies.
Read also | Why is India exploring imports of Pernod, Diageo Scotch in trade deal with UK?
Volume deliveries account for almost 80% of Scotch whiskey imports from Britain. These imports are then used to make Indian Made Foreign Liquor (IMFL), in which Scotch is blended with other spirits and ingredients.
India’s Scotch whiskey imports were valued at $335 million in 2024. The Scotch Whiskey Association estimates that the India-UK trade deal could increase the value of bilateral trade by $1.34 billion over five years.
(with input from agencies)
