India–UK Trade Deal Hits First Tariff Snag: Customs Seeks 150% Duty on Bulk Scotch, Containers Held at Ports
Indian customs want a 150% duty on bulk Scotch, double the 75% rate in the India–UK trade agreement. Pernod Ricard and Diageo each have more than 40 containers held at ports.
India’s customs authorities are seeking a 150% import duty on bulk Scotch whisky, twice the 75% rate set under the India–UK trade agreement, in what has become the pact’s first major tariff dispute since it came into force in July 2026, Business Today reported, citing Reuters.
The customs argument
A confidential Directorate of Revenue Intelligence (DRI) memorandum dated 4 November, which Reuters reviewed, says bulk Scotch meant for further processing should be classified as “compound alcoholic preparations” rather than finished whisky. In the DRI’s view, the lower rate applies only to finished products such as bottled Scotch. The memo warned that misclassification could have large, recurring revenue implications and asked customs commissioners to levy the 150% duty.
Shipments stuck
Pernod Ricard and Diageo each have more than 40 containers held at Indian ports, and Bacardi reportedly has five waiting for clearance. The companies have resisted paying the higher rate. Tax officials have also reportedly searched company offices and questioned executives in recent weeks.
Bulk shipments make up about 80% of the Scotch India imports from Britain by volume, and the spirit is widely blended with other ingredients to make Indian-Made Foreign Liquor (IMFL). Scotch exports to India were worth $335 million in 2024, and the Scotch Whisky Association has estimated the agreement could add $1.34 billion in exports over five years.
Government response
The commerce ministry reportedly assured liquor industry executives on 2 November that the government would honour the agreement and resolve the issue. A senior finance ministry source told Reuters that the finance and commerce ministries are discussing a solution. The International Spirits and Wines Association of India has warned that the dispute risks eroding a key market-access gain secured under the deal.
Featured image: Whisky casks at Dallas Dhu by Nilfanion, CC BY-SA 3.0, via Wikimedia Commons.
Sources
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