- India assures industry it will honour UK trade deal on Scotch tariffs
- Dispute centred on whether bulk Scotch qualifies for the tariff cut
- Tax officials had searched offices of major distillers
- Scotch exports to India worth about £250 million in 2024
INDIA has assured drinks executives that it will honour its trade agreement with Britain and resolve a dispute over tariffs on Scotch whisky, six people with direct knowledge of the matter told Reuters.
In the first major dispute linked to the India-UK trade deal, which came into force in July, Indian authorities had told major liquor companies that bulk Scotch imports did not qualify for the agreed tariff cut from 150 per cent to 75 per cent.
At a closed-door meeting on Monday, commerce ministry officials told industry executives that New Delhi would honour the deal in letter and spirit.
“We are potentially moving towards a resolution. Bulk Scotch whisky imports are indeed part of concessions under the trade deal,” one government source said.
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A second source said Commerce Secretary Rajesh Agrawal told attendees that steps were being taken “so that the duty concession on bulk Scotch whisky is not impaired”.
Tax raids
A resolution would be a relief for market leaders Diageo and Pernod Ricard, and for Indian distillers Radico Khaitan and Allied Blenders and Distillers.
Indian tax officials searched the offices of these and other companies in recent days and questioned executives. The companies did not respond to Reuters’ requests for comment.
Why bulk Scotch matters
The dispute centres on customs classifications. Tax inspectors told companies the lower tariff should not apply to Scotch imported in bulk containers, while the industry argues that all Scotch, bottled or bulk, should qualify.
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Bulk imports are central to the business because they are blended with other spirits to make Indian-Made Foreign Liquor (IMFL), which includes many popular whisky brands in India.
Scotch exports to India were worth $335 million (about £250 million) in 2024. The Scotch Whisky Association has forecast the trade deal could add $1.34 billion (about £1 billion) over five years.
The UK government said it was working with India on the issue, and the Scottish government also raised it with New Delhi.
(With inputs from Reuters)
