India’s Scotch Whisky Probe Threatens India-UK Trade Deal Benefits

India’s investigation into liquor giants Diageo and Pernod Ricard has sparked concerns that the benefits of the India-UK trade deal could be undermined. The International Spirits and Wines Association of India (ISWAI), representing the companies, has urged the Indian commerce minister to intervene, arguing that excluding bulk Scotch whisky imports from reduced tariffs contradicts the agreement.

Under the trade deal, which took effect on July 15, India agreed to reduce import duties on certain Scotch whisky products from 150% to 75%, with a further reduction to 40% over the next decade. However, Indian investigators reportedly maintain that bulk Scotch concentrates must pay the higher 150% duty. The Directorate of Revenue Intelligence searched Diageo and Pernod offices this month as part of an investigation into whether imported products were incorrectly classified to obtain lower tariffs.

The dispute has significant implications for India’s $65 billion alcohol market, where British products account for nearly 75% of imported spirits, primarily Scotch whisky. Diageo and Pernod use imported concentrates to produce popular Indian whisky brands, including McDowell’s No.1, Royal Stag and Blenders Pride. The British government has said it is working with India to resolve the issue and ensure UK businesses receive the tariff benefits agreed under the trade deal.

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