India expects quick resolution of bulk Scotch whisky tariff dispute
Commerce secretary Rajesh Agrawal said the government hopes to resolve the classification issue regarding bulk shipments held at ports soon.
The Indian government expects to resolve a dispute over bulk Scotch whisky shipments held at ports within a few days, according to the Times of India. Commerce secretary Rajesh Agrawal said on Friday that the Department of Revenue is working to address concerns regarding product classification.
The disagreement involves whether bulk Scotch imports qualify for a reduced 75 per cent duty under the India-UK trade agreement that began in July, or if they should attract a 150 per cent duty. Customs investigators, including the Directorate of Revenue Intelligence (DRI), argue the lower tariff applies only to finished products like bottled whisky, rather than concentrates that undergo further manufacturing.
A confidential DRI memorandum dated November 4 directed customs commissioners to apply the higher duty, stating that the goods are 'compound alcoholic preparations' rather than finished whisky. The memo warned that incorrect classification could have 'large-scale, recurring substantial revenue implications.'
Shipments from several liquor companies are currently held at ports, including more than 40 containers each from Pernod Ricard India and Diageo, and five containers from Bacardi. Other affected companies include Radico Khaitan and Allied Blenders and Distillers. Tax officials have also reportedly searched offices and questioned executives from some of these firms in recent weeks.
Approximately 80 per cent of Scotch whisky imports from Britain arrive in bulk to be used in manufacturing Indian-Made Foreign Liquor (IMFL). Scotch whisky exports to India were valued at $335 million in 2024. The International Spirits and Wine Association of India (ISWAI) has cautioned that the dispute risks undermining market-access benefits negotiated between the two nations.