Scotch imports: Finance, Commerce Ministries look for resolution as Diageo, Pernod shipments held up

The Finance and Commerce Ministries are holding discussions to resolve a dispute over the customs classification of bulk Scotch whisky imports under the India-UK free trade agreement, with shipments belonging to leading liquor companies Diageo and Pernod Ricard held up at Indian ports amid disagreement over the applicable import duty, sources said.

“The companies insist that bulk Scotch whisky imported from the UK for blending and manufacturing in India qualifies for the preferential 75 per cent customs duty under the India-UK Comprehensive Economic and Trade Agreement (CETA). But, customs investigators (DRI) are seeking to levy the higher 150 per cent duty, arguing that such imports do not constitute finished whisky eligible for the trade pact’s concessions,” a source tracking the matter said.

Duty on imports

The disagreement is on the classification of bulk Scotch under the customs tariff. “While importers maintain that the product falls under Chapter 22, Heading 2208, which specifically covers spirits and whisky, investigators are examining whether it should instead be placed under Heading 2106, covering food preparations not elsewhere specified or included,” the source added.

The distinction has significant commercial implications as the duty on qualifying whisky imports was reduced from 150 per cent to 75 per cent following the agreement’s implementation on July 15, 2026, with a phased reduction to 40 per cent by the tenth year,” an industry source said.

The International Spirits and Wines Association of India, whose members include both Pernod Ricard and Diageo, and the Confederation of Indian Alcoholic Beverages Companies have taken up the matter with the Commerce Department recently for an amicable resolution.

The importing industry has pointed out that bulk Scotch accounts for around 80 per cent of UK whisky imports by volume and is extensively used by Indian manufacturers to blend with domestic malt spirits to produce Indian-made whiskies.

“Importers have argued that denying preferential treatment to qualifying bulk imports could undermine the market-access commitments under the trade agreement and create an unintended advantage for finished imported whisky over products manufactured and bottled in India. Such a development could also affect domestic value addition,” the industry source noted.

The Commerce Ministry is now in discussions with the Finance Ministry for a resolution of the matter keeping the spirit of the trade pact in mind, the first source said.