Indian Customs hold Scotch whisky containers amid 150% tariff dispute

The Indian Customs Department has detained dozens of containers of bulk Scotch imported by Pernod Ricard and Diageo. This incident has emerged due to a dispute over tariffs under the trade agreement between India and the UK. According to a Reuters report, investigators are pressing for the collection of a 150 per cent tariff on these shipments, while the companies are expecting lower duty rates based on assurances given by New Delhi.

This is the first major dispute linked to the India-UK trade agreement that came into effect in July. Customs investigators have argued that bulk Scotch concentrates used to create whisky brands are not eligible for the reduced 75 per cent duty rate under this agreement. According to the investigators, the lower tariff rate applies only to bottled and ready-to-drink finished products.

Following lobbying by the industry, India's Ministry of Commerce had assured senior officials on November 2, 2026, that the government would honour the agreement and resolve the dispute as soon as possible. This assurance led liquor companies to hope that the lower tariff would be applied to them. However, a memo was issued on November 4, 2026, by the Directorate of Revenue Intelligence of the Ministry of Finance, instructing Customs Commissioners across India to maintain a different perspective on the matter.

This confidential memo, reviewed by Reuters, states that importers are "wrongly" claiming benefits under the India-UK agreement on bulk Scotch. According to the memo, a 150 per cent tariff should apply to such "compound alcoholic preparations" under the customs classification that came into effect on May 1. The memo further added that any misclassification by importers creates a significant revenue impact that is large-scale and frequent. Therefore, Customs officials have been instructed to ensure the correct implementation of the 150 per cent duty.

Clarifying the investigators' position, the memo states that preliminary investigations have revealed that the imported goods are not finished whisky, brands, or rum, but concentrates or compound preparations that require further production. For these reasons, they cannot be considered finished products.

In response to questions asked by Reuters on the entire matter, neither the Ministry of Finance, the Ministry of Commerce, nor the Revenue Directorate has provided a response. However, a senior source in the Ministry of Finance stated that the Ministry of Finance and the Ministry of Commerce are discussing to bring about a proper resolution to the matter. On the other hand, Pernod and Diageo, companies owned by UK-based Scotch whisky producer Chivas Brothers, have also not commented on this.

Statistically, exports of Scotch to India in 2024 stood at 335 million dollars. The Scotch Whisky Association has estimated that this trade agreement could increase this figure by 1.34 billion dollars over the next five years. It is noteworthy that approximately 80 per cent of the total volume of Scotch whisky coming from Britain to India is imported in bulk form.