Shipments belonging to Pernod Ricard and Diageo are being held at Indian ports as customs authorities seek a 150 per cent import duty, disputing their eligibility for preferential tariffs under the India-UK trade agreement
India’s customs authorities have detained bulk Scotch whisky consignments imported by global liquor companies Pernod Ricard and Diageo, following a disagreement over the import duty applicable under the India-UK trade agreement. The dispute centres on whether bulk whisky concentrates qualify for the preferential tariff of 75 per cent or attract the existing 150 per cent duty, according to Reuters report.
According to report, a confidential Directorate of Revenue Intelligence (DRI) memorandum dated 4 November, the imported consignments should be classified as “compound alcoholic preparations” rather than finished whisky. The classification could determine whether liquor companies can access the lower import duty negotiated under the bilateral agreement.
The disagreement represents the first significant trade-related dispute since the India-UK agreement came into effect in July 2026. It also raises questions about the implementation of tariff concessions negotiated between the two countries.
Customs Dispute Centres On Classification Of Bulk Whisky
The DRI maintains that the preferential 75 per cent import duty is applicable only to finished alcoholic products, including bottled Scotch whisky ready for retail consumption. Bulk concentrates, which undergo additional processing before being sold, do not fall within the same classification, according to the agency.
“Preliminary investigation revealed that the imported goods are not finished whisky/brand/rum as such, but are concentrates/compound preparations which are subjected to further manufacturing,” the memorandum stated.
The agency has warned that allowing such consignments to enter under the lower tariff classification could have substantial recurring revenue implications. It has consequently instructed customs commissioners to impose the 150 per cent duty on the disputed imports.
The position appears to differ from assurances reportedly given by the commerce ministry to representatives of the liquor industry on 2 November. According to Reuters, industry executives were told that the government would honour the trade agreement and work towards resolving the matter.
Pernod Ricard, Diageo Face Shipment Delays
The tariff disagreement has affected shipments belonging to some of the world’s largest spirits companies. Reuters reported that Pernod Ricard and Diageo each have more than 40 containers held at Indian ports, while Bacardi has five containers awaiting customs clearance.
The companies have opposed the higher duty demand and have not agreed to pay the additional tariff, raising concerns over possible supply disruptions. Customs authorities have also reportedly conducted searches at company offices and questioned executives in recent weeks.
Discussions between the finance and commerce ministries are underway to find a way forward. According to report the two departments were examining a possible resolution to the disagreement.
Bulk Scotch Imports Critical To Indian Liquor Industry
The classification issue has implications beyond imported premium whisky brands, given the importance of bulk Scotch consignments to India’s domestic spirits manufacturing industry. Such shipments account for approximately 80 per cent of Scotch whisky imports from Britain by volume.
Indian manufacturers use bulk Scotch as an ingredient in producing Indian-Made Foreign Liquor (IMFL), which typically involves blending Scotch with other spirits and ingredients. A higher import duty could therefore increase input costs for domestic manufacturers that depend on these consignments.
Scotch whisky exports to India were valued at USD 335 million in 2024. The Scotch Whisky Association has estimated that the India-UK trade agreement could generate an additional $1.34 billion in exports over five years.
However, uncertainty surrounding the customs classification of bulk shipments could affect the industry’s ability to benefit from the negotiated tariff concessions.
The International Spirits and Wines Association of India has cautioned that the dispute could undermine an important market-access provision secured through the bilateral agreement.
The episode also brings renewed attention to concerns among multinational businesses over India’s customs classification practices and retrospective tax demands. International companies, including Samsung and Volkswagen, have previously faced disputes with Indian authorities over taxation and regulatory interpretations.
