Bulk Scotch Whisky Imports Held Up At Indian Ports: Commerce, Finance Ministries Meet To Resolve Dispute Over Duties

(MENAFN- Live Mint) After the India-UK Free Trade Agreement (FTA ) encountered its first hurdle following its implementation in July 2026, the Commerce and Finance ministries reportedly held a meeting on Wednesday to resolve the issue of a proposed 150% customs duty on bulk Scotch whisky imports by Pernod Ricard and Diageo.

ANI, citing sources, reported that the meeting was held to address liquor companies' concerns over the classification of imported Scotch whisky. Officials from both ministries discussed the matter at length and expressed hope that it would be resolved soon.

Also Read | India-UK FTA faces first hurdle as 40 containers of Pernod, Diageo Scotch stuck Bulk Scotch whisky import dispute: What we know so far

The development comes after representatives of the International Spirits and Wine Association of India (ISWAI) and the Confederation of Indian Alcoholic Beverage Companies (CIABC) met Commerce Secretary Rajesh Agarwal on November 2 and raised concerns over the difference in tariff rates. Subsequently, customs officials held shipments belonging to several companies, including Pernod Ricard India, Diageo, Radico Khaitan and Allied Blenders and Distillers.

The industry has objected to a memorandum issued by the Directorate of Revenue Intelligence (DRI), which classified imported Scotch whisky as alcoholic beverage concentrate rather than finished whisky. This triggered a dispute over the applicable HS code and customs duty. The issue has also been described as a technical complication in the implementation of the India-UK FTA.

ANI reported, citing sources, that the Commerce Secretary assured industry representatives that the government would take a decision on the matter soon.

What is the dispute over the classification of bulk Scotch whisky imports?

The HS code determines the applicable customs duty and rules. The DRI 's position is that the imported products should be classified as alcoholic beverage concentrate rather than finished Scotch whisky because they enter India at a higher alcohol strength and are diluted later at a domestic facility. This classification could alter the duty calculation and raise questions about the accuracy of the original declarations.

The DRI says the imported concentrate has an alcohol content of 62–66%, compared with 42–46% for finished Scotch whisky. Since the two products fall under different HSN codes, the companies maintain that their imports qualify under the code eligible for concessions under the FTA.

DRI officials are examining whether some bulk Scotch whisky imports by the companies were classified in a manner that allowed them to claim lower customs duties under the India-UK trade agreement.

Also Read | Why is India probing Pernod, Diageo Scotch imports under trade deal with UK?

The sources clarified that the probe does not amount to a fresh increase in customs duty or establish any wrongdoing by the companies. Instead, authorities are examining which categories of Scotch imports qualify for the lower rate introduced under the India-UK trade agreement on July 15, 2026. Under the pact, the duty on eligible imports was reduced from 150% to 75%, effectively halving the rate.

However, the DRI has argued that the reduced duty applies only to finished products, including bottled, ready-to-drink Scotch, and not to bulk Scotch concentrates used in the manufacture of whisky brands.

DRI memo and impact on Scotch whisky imports

Reuters recently reported that it had reviewed a confidential DRI memorandum dated November 4, which instructed customs officials across the country to continue applying the 150% duty on bulk Scotch imports. The memo described importers' claims for benefits under the trade agreement as "incorrect", stating that the products were concentrates or compound preparations requiring further manufacturing. It also flagged the potential for large-scale and recurring revenue implications arising from misclassification.

The classification dispute has also resulted in Scotch whisky shipments being held up at Indian ports. Reuters reported that Pernod Ricard and Diageo each have more than 40 containers awaiting clearance, while Bacardi has five containers on hold. The companies are reportedly reluctant to pay the 150% duty, and prolonged delays could disrupt supplies.

Also Read | Why is India probing Pernod, Diageo Scotch imports under trade deal with UK?

Bulk shipments account for nearly 80% of Scotch whisky imports from Britain by volume. These imports are subsequently used to produce Indian-Made Foreign Liquor (IMFL), in which Scotch is blended with other spirits and ingredients.

India's Scotch whisky imports were valued at $335 million in 2024. The Scotch Whisky Association has projected that the India-UK trade agreement could increase the value of bilateral trade by $1.34 billion over five years.

(with inputs from agencies)

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