Liquor Industry Worried As India Probes UK's Scotch Whisky Import

An investigation by India into bulk Scotch whisky imports has shaken up a $65 billion market, spotlighting a landmark India-UK trade pact celebrated after New Delhi agreed to halve tariffs on the products.Here is an explainer on the first significant dispute over the India-UK free trade agreement since it took effect in July.What Was The Fine Print Of The India-UK Pact?Whisky tariffs were a sticking point during the years of protracted negotiations leading up to the deal's July 15 implementation.Under the historic trade pact, India agreed to slash import taxes on certain Scotch imports to 75 percent from 150 percent immediately, and to 40 percent over 10 years.The British government said "iconic UK products" including whiskies and gin would benefit from India's tariff changes.Though Indian state taxes and other levies are high and vary across the nation, the duty cut was still seen bringing some price relief on whisky products.What Is India's Thinking and Why Are Companies Worried?The Indian government is arguing privately with companies - from Diageo and Pernod to Radico Khaitan and Allied Blenders and Distillers - that their bulk Scotch imports do not qualify for the lower 75 percent tariff, Reuters has reported.While imported bottled Scotch, like The Glenlivet, gets the reduced duty, Indian officials argue the benefit does not extend to bulk Scotch, which is often used to make popular whisky brands in India, even though the pact's tariff schedule also covers Scotch imported in bulk.Tax officials, who searched offices of many companies in recent weeks as part of the investigation, have asserted a new customs classification introduced earlier this year for "compound alcoholic preparations of a kind used for the manufacture of beverages" is the one that applies to such bulk imports, and attracts the old 150% tariff.The industry disagrees."Compound alcoholic beverages are essentially flavoured or modified alcohols, whereas bulk Scotch Whisky is a distilled alcoholic beverage produced with malted barley and water," said Rajnish Singh, founder of India's Yaana Advisors, which advises liquor companies on regulation.The Indian government is due to hold talks with the industry to discuss the issues.Why Do Bulk Scotch Imports Matter So Much?India is Scotch whisky's largest export market by volume, with the equivalent of more than 220 million bottles exported there in 2025, according to the UK-based Scotch Whisky Association.But around 80 percent of Scotch whisky imports from Britain by volume arrive in bulk to be used to make popular brands, industry estimates show.Most of those imports go into so-called Indian-Made Foreign Liquor, or IMFL whisky, created by mixing some Scotch with other spirits and ingredients. Pernod, Diageo and many Indian companies have popular offerings created this way.Pernod's Blenders Pride, for example, is described on Pernod's website as a blend of Indian grain spirit and imported Scotch malts from Chivas Brothers, "tailored to the tastes of this nation of whisky enthusiasts".Has Any Government Intervened?After the Reuters report last month on the scrutiny of companies in India, a spokesperson for the UK government said, "We are working with the government of India to resolve this issue to ensure UK businesses can export under the tariffs agreed in the trade deal."(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)