Indian customs authorities have detained dozens of containers carrying bulk Scotch whisky imported by Pernod Ricard and Diageo amid a dispute over import duties under the India-UK trade agreement. The companies expected to benefit from a reduced 75% import tariff negotiated under the trade pact, which came into effect in July 2026. However, customs investigators are demanding a 150% tariff, arguing that bulk Scotch concentrates used in manufacturing Indian whisky brands do not qualify for the lower duty.
The dispute has created uncertainty for international liquor companies and raised questions about the implementation of India’s trade agreement with the United Kingdom. According to a Reuters report published on November 11, Pernod Ricard and Diageo each have more than 40 containers stuck at Indian ports, while Bacardi has five containers on hold. The disagreement has continued despite assurances from India’s commerce ministry that the government would honour the tariff concessions negotiated under the trade agreement.
Why India Is Holding Pernod Ricard and Diageo’s Scotch Shipments
The dispute centres on how imported Scotch whisky is classified under Indian customs regulations.
Under the India-UK trade agreement, India agreed to reduce import duties on certain Scotch whisky products from 150% to 75%.
However, customs investigators argue that the reduced tariff applies only to finished products, such as bottled Scotch whisky that is ready for consumption.
Bulk Scotch imports, which arrive in large containers and are subsequently processed or blended with other ingredients, are being treated differently.
According to a confidential November 4 memo from the Directorate of Revenue Intelligence (DRI), these imports should be classified as compound alcoholic preparations rather than finished whisky.
The memo instructed customs commissioners across India to apply the 150% import duty to these shipments.
Investigators argued that the imported products undergo further manufacturing and therefore do not qualify for the preferential tariff treatment available to finished Scotch whisky.
This interpretation has created a disagreement between the customs authorities and liquor companies that expected the reduced duty to cover their bulk imports.
India-UK Trade Deal Promised Reduction in Scotch Whisky Tariffs
The tariff dispute is linked to the India-UK Comprehensive Economic and Trade Agreement (CETA), which came into effect in July 2026.
The agreement was designed to improve market access between the two countries by reducing tariffs across several industries.
One of its important provisions involved lowering India’s import duties on qualifying British whisky and gin products.
Before the agreement, Scotch whisky imports faced a 150% customs duty.
Under the negotiated arrangement, the duty was reduced to 75%, with further reductions planned over time under the agreement’s tariff schedule.
The concession was expected to benefit British whisky producers and Indian companies importing Scotch for domestic manufacturing.
However, the current disagreement over bulk imports has created uncertainty about how broadly the tariff reduction applies.
India’s commerce ministry reportedly assured liquor industry executives on November 2 that the government would honour the trade agreement and resolve the dispute.
Nevertheless, a subsequent DRI communication maintained the customs department’s position that bulk Scotch concentrates should attract the higher duty.
The finance and commerce ministries are now discussing a possible resolution.
More Than 80 Containers of Scotch Whisky Stuck at Indian Ports
The disagreement is already affecting shipments belonging to some of the world’s largest liquor companies.
According to industry sources cited by Reuters, the detained shipments include:
| Company | Containers held |
|---|---|
| Pernod Ricard | More than 40 |
| Diageo | More than 40 |
| Bacardi | 5 |
| Total | More than 85 |
Pernod Ricard and Diageo are reportedly unwilling to pay the higher 150% tariff because they believe their imports qualify for the reduced duty under the trade agreement.
The prolonged delays could disrupt manufacturing schedules and create supply challenges for liquor companies operating in India.
Customs authorities have also searched the offices of several companies in recent weeks and questioned executives about their import classifications.
The companies have faced increased regulatory scrutiny as investigators examine whether bulk Scotch imports were correctly declared under Indian customs rules.
Why Bulk Scotch Imports Are Important for India’s Liquor Industry
Bulk Scotch imports play an important role in India’s domestic alcoholic beverages industry.
Unlike bottled Scotch whisky sold directly to consumers, bulk imports are transported in large containers and used as ingredients in manufacturing and blending operations.
Approximately 80% of Scotch whisky imports from Britain by volume arrive in bulk, according to the Reuters report.
Indian manufacturers use these imports to produce Indian-Made Foreign Liquor (IMFL), a category that includes blended whisky products.
Small quantities of Scotch whisky can be combined with other spirits and ingredients to manufacture products for the domestic market.
This business model allows companies to offer whisky products at different price points while using imported Scotch as one of their ingredients.
The customs dispute could therefore affect not only imported premium whisky but also domestic manufacturing operations that depend on bulk Scotch supplies.
If shipments remain delayed, companies may face additional inventory costs, production disruptions and difficulties maintaining supplies.
Pernod Ricard and Diageo Have Major Stakes in India’s Alcohol Market
Pernod Ricard and Diageo are among the largest international players in India’s alcoholic beverages industry.
Pernod Ricard owns several popular whisky brands, including Chivas Regal and Royal Stag’s parent brand portfolio in India.
Diageo operates in India through United Spirits, which owns well-known brands such as McDowell’s and Johnnie Walker.
Both companies rely on a combination of imported spirits, domestic manufacturing and distribution networks to serve Indian consumers.
India is particularly important because of its large population and growing demand for alcoholic beverages across different price categories.
The dispute could therefore have implications for their manufacturing operations, import costs and long-term business strategies in the country.
However, the impact will depend on how quickly Indian authorities resolve the disagreement and whether the lower tariff is ultimately extended to bulk Scotch imports.
Scotch Whisky Exports to India Could Receive a Major Boost
The tariff disagreement also matters for the United Kingdom’s whisky industry.
Scotch whisky exports to India were valued at approximately $335 million in 2024.
The Scotch Whisky Association has estimated that the India-UK trade agreement could increase the value of Scotch exports to India by approximately $1.34 billion over five years.
The lower tariff was expected to make British whisky more competitive in the Indian market and encourage additional trade.
However, uncertainty surrounding bulk imports could weaken the commercial benefits expected from the agreement.
The International Spirits and Wines Association of India has reportedly warned the government that excluding bulk Scotch from the tariff concessions could undermine an important market-access benefit negotiated under the trade pact.
The outcome could influence future investment decisions by international liquor manufacturers and British whisky exporters.
The Bigger Picture
The dispute highlights the challenges of implementing international trade agreements when customs authorities and businesses interpret tariff classifications differently. Although the India-UK agreement introduced lower duties for qualifying Scotch whisky imports, uncertainty over bulk concentrates has created a conflict between the negotiated trade benefits and domestic customs enforcement. The issue could become an important test of how India implements its commitments under the agreement.
For the liquor industry, the consequences extend beyond the detained shipments. Bulk Scotch imports support domestic manufacturing, employment, distribution and the production of several popular whisky brands. A prolonged disagreement could increase costs for international companies and Indian manufacturers while affecting the expected growth in British whisky exports. The resolution will be important for maintaining confidence in the India-UK trade relationship.
Looking Ahead
The immediate focus is on discussions between India’s finance and commerce ministries to resolve the disagreement over bulk Scotch classification. The commerce ministry has previously assured industry representatives that the government intends to honour the tariff concessions, while the DRI continues to support the 150% duty on bulk alcoholic preparations. A clear government decision will be necessary to determine whether the detained shipments can be released under the reduced tariff.
The outcome could also influence how other products are classified under India’s trade agreements and how international companies approach future imports. For Pernod Ricard, Diageo and British whisky exporters, the resolution will determine whether the expected tariff benefits can be realised in practice. A prolonged dispute could delay supplies and affect the commercial opportunities created by the India-UK trade agreement.
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