India’s move to reduce import duties on Scotch whiskey as part of its trade agreement with the UK was expected to lower the cost of whiskey for manufacturers. Just four months after the agreement went into effect, however, a dispute over customs classification has resulted in dozens of whiskey shipments being held up at Indian ports. The dispute has raised questions about how the new trade deal will be implemented and whether most of the imported whiskey qualifies for the concessions.
The India bulk Scotch tariff dispute involves the major alcohol companies (Pernod Ricard, Diageo, and Bacardi, among others). Importers expect that any qualifying bulk Scotch shipments will be eligible for the reduced 75% duty. However, Indian customs investigators are seeking a 150% duty on certain shipments. This is one of the first major disputes to arise over the implementation of the India-UK deal.
The India-UK Trade Agreement changed the import duty on Scotch Whiskey. Previously, qualifying Scotch whiskey imports were subject to a 150% tariff. That has now been reduced to 75% under the agreement, with a further phased reduction to 40% over 10 years. The reduction in the import duty on Scotch whiskey from India to the UK was a major development for manufacturers importing from Scotland.
Around 80% of Scotch shipped to India is in bulk rather than in finished retail bottles. This bulk Scotch is used both to support local bottling and as a component in the manufacturing of Indian Made Foreign Liquor (IMFL). The India-UK trade agreement whiskey tariff provisions were therefore expected to benefit those companies whose Indian portfolios relied on imported Scotch.
.jpg&w=1920&q=75)
The dispute is over the classification of certain shipments of imported whiskey under Indian customs rules. The trade agreement provides for a reduced duty rate on qualifying Scotch whiskey, but investigators believe some of the bulk shipments in question do not qualify for that treatment. A confidential DRI memorandum of November 4, 2026, states that the products in question should be classified as compound alcoholic preparations rather than as finished whiskey.
Investigators believe these products are actually manufactured in India and should therefore be subject to the higher duty. The 150% bulk Scotch duty position is based on a customs classification that investigators say has applied to such products since May 1, 2026. The importers, on the other hand, argue that qualifying bulk Scotch whiskey should be entitled to the preferential rate under the agreement. Their view is that bulk whiskey imported into India in large containers should not lose the concession simply because it is intended for further processing or blending in India.
The dispute concerns the nature of the product being brought into the country and whether it is eligible under the agreed terms. Not every bulk shipment is necessarily for alcoholic preparation, and the final classification of the disputed shipments is still to be determined.
.jpg&w=1920&q=75)
Officials from the Commerce Ministry and representatives from the Indian liqour industry came together to discuss the type of classification of bulk Scotch imports. The Ministry assured the senior industry executives that the government was committed to upholding its obligations under the India-UK trade agreement and would be working to resolve the classification issue.
The assurance was that eligible shipments would be entitled to the reduced Scotch whisky 75% import duty. Two days later, the DRI issued a memorandum to the Customs Commissioners instructing them to continue applying the higher duty with respect to the products in dispute. The memorandum noted that importers were claiming preferential treatment for products that the investigators had categorised as compound alcoholic preparations. It also made it clear that incorrect classification could have a significant impact on government receipts.
The DRI bulk Scotch investigation has therefore created some uncertainty for the manufacturers. The Commerce Ministry has said it intends to honour the trade agreement, but the customs investigators remain uncertain whether the shipments in question are eligible for its benefits.
Can Indian whiskies outperform international brands? Discover 5 Indian whiskies that give global favorites a run for their money.
Bulk Scotch whiskey imports into India form a major part of the country’s alcohol manufacturing sector. Many international and domestic whiskey brands use Scotch whiskey as a component in their products, which are then blended, bottled, or made in India. The difference between a 75% and a 150% tariff is, of course, significant. For a manufacturer importing large volumes of whiskey, the 150% tariff could represent a major cost increase. There is also the potential for additional storage costs, production delays, and general disruption to the supply chain if the classification issue remains unresolved.
The ISWAI has reportedly raised concerns with the government on the issue. They feel that uncertainty around the tariff concession could damage a very significant market access arrangement that India and the UK have negotiated. Manufacturers need to know their import costs to plan production, manage inventory, and set prices. If there is uncertainty around customs duties, it becomes very difficult for them to determine their costs or commit to future shipments.
Any effect on the consumer would, of course, depend on the outcome of the dispute, how much the manufacturers are prepared to absorb, and the applicable state taxes on alcohol sales.
Looking to explore Indian whiskies? Discover standout blends and Indian single malts worth knowing about.
.jpg&w=1920&q=75)
The biggest outstanding issue is whether the disputed shipments are, in fact, Scotch whisky under the trade agreement or compound alcoholic preparations, which would attract duty. The difference is that the tariff concessions are already in place.
Another major issue is the divergence between the Commerce Ministry's position and the DRI's. The Commerce Ministry has told the manufacturers that India's trade commitments will be honoured, but the customs investigators have continued to pursue the higher tariff on the shipments under investigation.
For whisky producers, it's all about gaining clarity on the duty that will apply to their imports. For the wider industry it's a matter of seeing how the deal will work in practice with respect to the classification and clearance of bulk Scotch in India.
This article draws on industry reports and official UK Government trade documents covering India's bulk Scotch whisky tariff dispute, the DRI investigation, customs classification, detained shipments, and tariff provisions under the India-UK trade agreement.
India’s move to reduce the Scotch whiskey import duty from 150% to 75% was a major shift in the India-UK trade relationship. However, the benefits of that reduction are far from certain for certain bulk shipments. The real question is which other products will be eligible for the concession and how the customs authorities will implement and carry out policies and regulations.
.jpg&w=3840&q=100)
.jpg&w=3840&q=100)
.jpg&w=3840&q=100)