India investigates bulk Scotch whisky imports under trade pact dispute
The probe into bulk Scotch imports has created tension regarding tariff reductions agreed upon in the India-UK trade deal.
The Indian government is investigating bulk Scotch whisky imports, a move that has impacted a $65 billion market, according to reports from BusinessLine and Business Standard. The investigation follows the implementation of an India-UK trade pact on July 15, which included a commitment to reduce certain Scotch import taxes from 150 per cent to 75 per cent immediately, and to 40 per cent over 10 years.
Indian officials are privately informing companies, including Diageo, Pernod, Radico Khaitan, and Allied Blenders and Distillers, that bulk Scotch imports do not qualify for the lower 75 per cent rate. While bottled Scotch receives the reduced duty, officials argue that bulk imports should fall under a different customs category for alcoholic preparations used in making beverages, which carries the original 150 per cent tariff.
Industry experts disagree with this classification. Rajnish Singh, founder of Yaana Advisors, stated that while compound alcoholic beverages are modified or flavoured alcohols, bulk Scotch whisky is a distilled beverage made from water and malted barley. The International Spirits & Wines Association of India has noted that this classification issue could undermine market-access benefits negotiated between the two nations.
The dispute is significant because approximately 80 per cent of Scotch whisky imported from Britain by volume arrives in bulk. These imports are often used to produce Indian-Made Foreign Liquor (IMFL). The Scotch Whisky Association noted that India is the largest export market for Scotch by volume, with more than 220 million bottles exported in 2025.
The UK government said it is working with India to resolve the issue so British businesses can export under the agreed tariffs. Scotland's leader John Swinney also raised the matter with the Indian government during a visit that ended last week. The Indian government is expected to hold talks with the industry to discuss the matter.