India has assured liquor companies that it will honor its trade pact with Britain and resolve a dispute over tariffs on bulk Scotch whisky, The Economic Times reported. The assurance came at a closed-door meeting between commerce ministry officials and industry executives. It should ease concerns at Diageo, based in London, England, and Pernod Ricard, based in Paris, France.
The dispute is the first major test of the India-UK trade agreement, which took effect in July. Under the pact, India cut import duties on certain Scotch to 75% from 150%, with a further cut to 40% over ten years. In recent weeks, tax officials opened investigations into liquor companies and argued that bulk Scotch does not qualify for the lower rate.
The disagreement turns on customs classification. Tax officials say a category introduced this year, for compound alcoholic preparations used to make beverages, covers bulk imports and carries the old 150% duty. The industry says all Scotch, bottled or bulk, qualifies for the reduced rate. According to the report, the commerce minister told attendees that officials are taking the steps needed so the duty concession on bulk Scotch is not impaired.
Bulk Scotch is a large part of the trade. Industry estimates say 80% of Scotch imports from Britain by volume arrive in bulk, and most of it goes into whisky made in India. Pernod Ricard’s Blenders Pride, for example, blends grain spirit from India with imported Scotch malts. India is the largest export market for Scotch by volume, with the equivalent of more than 220 million bottles shipped there in 2025, according to the Scotch Whisky Association. Scotch exports to India were worth $335 million in 2024, and the association has forecast that the pact could lift that to $1.34 billion over five years.
For American and European companies weighing India, the case shows that a tariff cut written into a trade agreement still depends on how customs officers in India classify the product.
