India-UK Trade Pact: Customs Dispute Delays Scotch Imports Amid Tariff Controversy
Indian customs authorities are currently holding numerous containers of bulk Scotch whisky imported by Pernod Ricard and Diageo. Investigators maintain that these shipments are subject to a 150% import duty, despite prior assurances from the commerce ministry that a lower tariff under the India-UK trade pact would be honored. The core issue revolves around whether bulk Scotch concentrates, used for manufacturing whisky brands, qualify for the reduced 75% duty established by the trade agreement that took effect in July.
The customs officials argue that the concession applies solely to finished products, such as bottled Scotch, rather than concentrates that require further processing. Following industry lobbying, the commerce ministry assured executives on November 2 that India would uphold the trade pact and seek a swift resolution. However, a confidential memo from the finance ministry’s Directorate of Revenue Intelligence (DRI), dated November 4, instructed customs commissioners to continue enforcing the higher duty.
Finance ministry memo backs 150% duty
The DRI memo stated that importers were “incorrectly” claiming benefits under the India-UK trade pact for bulk Scotch shipments. It asserted that these products should incur a 150% tariff under a customs classification introduced on May 1 for “compound alcoholic preparations.” The memo cautioned that any misclassification could have “large-scale, recurring substantial revenue implications” and directed customs officials to ensure the correct application of the higher duty. A senior finance ministry source confirmed that discussions between the finance and commerce ministries are ongoing to find an appropriate resolution.
More than 80 containers of Pernod, Diageo held
The customs dispute has resulted in shipments from both companies being held at Indian ports, with neither willing to pay the higher duty. Sources indicate that Pernod Ricard and Diageo each have over 40 containers detained, while Bacardi has an additional five containers on hold. These delays could disrupt supplies, as tax officials have also conducted searches at the offices of several companies, including Pernod Ricard and Diageo, and questioned executives. Approximately 80% of Scotch whisky imports from Britain by volume arrive in bulk and are used to produce Indian-Made Foreign Liquor (IMFL), which blends Scotch with other spirits and ingredients. Scotch exports to India were valued at $335 million in 2024.
