New Delhi signals that bulk Scotch imports will receive the 75% concessional tariff under the India-UK trade agreement, potentially ending a dispute that has unsettled major international and Indian liquor manufacturers.
India has moved to resolve a growing dispute over import duties on Scotch whisky, reassuring liquor manufacturers that tariff concessions under its trade agreement with the United Kingdom will be honoured. The development could provide significant relief to global spirits companies Diageo and Pernod Ricard, along with Indian manufacturers Radico Khaitan and Allied Blenders and Distillers.
At a meeting with industry representatives on November 2, Commerce Ministry officials indicated that bulk Scotch whisky imports would qualify for the reduced customs duty under the bilateral trade agreement.
The India-UK trade agreement, which came into force on July 15, 2026, reduced import duties on qualifying Scotch whisky from 150% to 75%. The tariff is scheduled to decline further to 40% over the next decade.
However, Indian tax investigators recently challenged the application of the concession to Scotch imported in bulk containers rather than finished bottles. They classified certain bulk imports under a separate customs category, potentially subjecting them to the original 150% duty.
The interpretation triggered investigations into major liquor companies, including searches of company premises and questioning of executives.
Industry representatives maintained that the agreement covered both bottled and bulk Scotch whisky, making the higher-duty interpretation inconsistent with the trade concessions.
Bulk Scotch is an important raw material for India's domestic whisky industry. It is frequently blended with other spirits and ingredients to manufacture Indian-Made Foreign Liquor (IMFL), including several popular whisky brands.
The commercial implications are substantial.
150% to 75%: The initial reduction in Scotch whisky import duty under the trade agreement.
40%: The tariff scheduled to apply after the phased reductions over 10 years.
80%: The approximate share of Scotch whisky imports from Britain arriving in bulk.
$335 million: The value of Scotch whisky exports to India in 2024.
$1.34 billion: The additional Scotch trade opportunity projected over five years by the Scotch Whisky Association.
Excluding bulk shipments from the concession could have increased procurement costs for Indian distillers, squeezed margins and potentially pushed up prices for whisky brands relying on imported Scotch.
It could also have created an unintended advantage for imported bottled whisky over spirits blended and manufactured domestically.
The disagreement had attracted attention from both the British and Scottish governments.
Scottish First Minister John Swinney raised concerns about the treatment of bulk Scotch imports during his October visit to India. The British government also engaged with New Delhi over the issue.
The dispute represented an early test of the implementation of the trade agreement, particularly its ability to provide predictable market access for businesses.
Commerce Secretary Rajesh Agrawal reportedly informed industry representatives that steps were being taken to protect the tariff concession for bulk Scotch imports.
However, a formal resolution and the treatment of imports already under investigation remain to be clarified.
For liquor manufacturers, the immediate priority is regulatory certainty. A definitive settlement would help companies plan imports, manage production costs and evaluate expansion opportunities.
Beyond the whisky industry, the outcome will also be an important indication of how India and Britain handle customs disputes under their new trade partnership.