India Holds Pernod Ricard and Diageo Scotch Imports Amid 150% Tariff Dispute

Dozen containers of bulk Scotch sit detained at Indian ports as investigators press for a 150% tariff despite a bilateral trade pact, RTÉ reported.

The action marks the first major trade dispute linked to the India-UK trade agreement that took effect in July.

Investigators ordered the higher levy by arguing that bulk Scotch concentrates used to make whisky brands do not qualify for a reduced 75% duty. That lower rate applies only to finished products such as bottled, ready-to-drink Scotch, according to the findings.

Exports of Scotch to India totalled $335 million in 2024. The Scotch Whisky Association forecast that the trade deal could boost that figure by $1.34 billion over five years.

Driven by industry lobbying, the Indian commerce ministry gave top executives a November 2 guarantee that it would respect the trade agreement and settle the dispute quickly, prompting major alcohol producers to anticipate the reduced levy. Yet a confidential finance ministry memo dated November 4 directed customs commissioners across India to take a different view.

The Directorate of Revenue Intelligence memo said that importers were incorrectly claiming benefits under the pact for bulk Scotch. Officials argued the shipments should face a 150% tariff under a customs classification effective since May 1 for compound alcoholic preparations.

The confidential memo explained that the imported goods are not finished whisky, brand, or rum, but concentrates subjected to further manufacturing. Any misclassification carries large-scale, recurring substantial revenue implications, the document added.

“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 memo said.

Pernod Ricard and Diageo hold more than 40 containers each stuck at Indian ports, while Bacardi has five containers on hold. The affected companies are unwilling to pay the higher duty, four people with knowledge of the matter told RTÉ.

Over the course of recent weeks, tax inspectors have raided corporate offices belonging to several companies, including Diageo and Pernod, while also interrogating leadership personnel. The International Spirits and Wines Association of India privately warned New Delhi that the dispute risks undermining market-access benefits agreed between India and the United Kingdom.

About 80% of Scotch whisky imports from Britain arrive in bulk by volume. Companies use these imports to produce Indian-Made Foreign Liquor by blending small quantities of Scotch with other spirits and ingredients.

India’s finance ministry, commerce ministry, and revenue directorate did not respond to queries regarding the detained shipments. However, the finance ministry and commerce ministry are under discussion for an appropriate resolution of the matter, a senior finance ministry source told RTÉ.

“The finance ministry and commerce ministry are under discussion for an appropriate resolution of the matter,” the senior finance ministry source said.