The Indian government has assured liquor companies that bulk imports of Scotch whisky will qualify for the reduced 75 per cent import duty under the India-UK Comprehensive Economic and Trade Agreement (CETA), seeking to resolve a dispute over the eligibility of such shipments for tariff concessions.
According to a Reuters report citing six people familiar with the matter, commerce ministry officials gave the assurance during a closed-door meeting with liquor industry executives on Monday, stating that New Delhi would honour the trade agreement in letter and spirit.
A government source said discussions were moving towards a resolution, confirming that bulk Scotch whisky imports were covered under the concessions provided in the trade agreement. Commerce Secretary Rajesh Agrawal also reportedly told industry representatives that necessary steps were being taken to ensure that the duty concession was not impaired.
Dispute over bulk Scotch whisky imports
The disagreement arose after tax officials questioned whether the reduced import duty applied to Scotch whisky imported in bulk containers, rather than in finished bottles.
Under the India-UK trade agreement, which came into effect in July 2026, India agreed to reduce import duty on Scotch whisky from 150 per cent to 75 per cent.
However, tax authorities had informed liquor companies that the lower tariff did not extend to bulk shipments, creating uncertainty over the implementation of the agreement.
The issue is particularly significant for the industry, as approximately 80 per cent of Scotch whisky imported into India arrives in bulk. Indian manufacturers use these shipments to produce Indian-Made Foreign Liquor (IMFL) whisky by blending Scotch with other spirits and ingredients.
The industry has maintained that both bottled and bulk Scotch whisky imports should receive the reduced tariff treatment under the agreement.
Major liquor companies affected
The dispute has affected major international liquor companies, including Diageo and Pernod Ricard, along with Indian manufacturers such as Radico Khaitan and Allied Blenders and Distillers.
Tax officials have reportedly searched the offices of several companies in recent days and questioned executives regarding the classification and eligibility of bulk Scotch whisky imports for the duty concession.
The issue has also attracted attention from the United Kingdom and Scotland. The British government has said it is working with New Delhi to resolve the matter, while the Scottish government has separately raised concerns over the treatment of bulk Scotch imports.
Trade pact expected to boost Scotch exports
Scotch whisky exports to India were valued at $335 million in 2024. The Scotch Whisky Association has projected that the India-UK trade agreement could generate an additional $1.34 billion in Scotch whisky exports over five years.
The government’s assurance is expected to provide greater clarity to liquor manufacturers and importers, although the implementation of the necessary measures will be important in resolving the dispute and ensuring that the agreed tariff concessions extend to bulk shipments.