India has assured liquor executives it will honour the India-UK free trade agreement, six sources with direct knowledge of the matter said, according to a report by The Economic Times on 2 November1.

At a closed-door meeting that day, commerce ministry officials told liquor executives that New Delhi would honour the pact "in letter and spirit"1. A second government source said Commerce Secretary Rajesh Agrawal told those present that necessary steps were being taken "so that the duty concession on bulk Scotch whisky is not impaired"1. The commerce ministry did not immediately respond to a request for comment1. No public statement has been issued, and the assurance remains unconfirmed.

The dispute is not settled at the border. Customs officials have told companies that bulk Scotch does not qualify for the reduced rate. Officials say such shipments fall under a customs classification introduced earlier this year, for "compound alcoholic preparations of a kind used for the manufacture of beverages", which carries the old 150% duty2. Bottled Scotch, such as The Glenlivet, is cleared at 75%2.

The pact, in force since 15 July 2026, cut the import tax on certain Scotch to 75% from 150% immediately, and to 40% over 10 years2, 5. Its tariff schedule also covers Scotch imported in bulk. The International Spirits and Wines Association of India has written that the agreement expressly provides preferential tariff treatment for whisky under the relevant tariff lines2, 4.

Where the investigation stands

The Directorate of Revenue Intelligence searched the offices of Pernod Ricard and Diageo and questioned executives in October. It also visited two offices and a manufacturing facility of Radico Khaitan3, 4. Pernod and Diageo have said they are cooperating with investigators, and all the firms have said they comply with the law6, 7. Public reports describe searches, visits and questioning. They do not describe a show-cause notice or a final duty demand.

What investigators have told companies is that bulk imports must be declared under the classification attracting 150%, according to three people with direct knowledge of the matter4.

Why bulk matters

India is the biggest market by volume for Scotch. Importers there took the equivalent of more than 220 million bottles in 2025, the Scotch Whisky Association says2. Around 80% of Scotch imports from Britain arrive in bulk, by industry estimates, most of it blended into Indian-Made Foreign Liquor2, 5. Scotch exports to India were worth $335 million in 2024, and the association has forecast the pact could lift that to $1.34 billion over five years1.

Britain accounts for almost 75% of India's imported spirits, driven mainly by Scotch, according to Crisil Ratings7.

For a buyer, the exposure sits on the duty line. The rate on the same goods would move from 75% to 150% if the customs view holds2. State excise and other levies are separate, high and different across states2.

What happens next

The Confederation of Indian Alcoholic Beverage Companies represents Indian makers. It wrote to the government on 27 October that excluding bulk Scotch from the lower rate "could create an unintended incentive in favour of importing finished products"6.

Britain has said it is "working with the government of India to resolve this issue to ensure UK businesses can export under the tariffs agreed in the trade deal"2. Scotland's leader, John Swinney, raised the treatment of bulk Scotch with the Indian government during a visit that ended last week2.

Four checks matter for the next shipment:

  • The tariff line claimed on each bill of entry, and the rate the FTA schedule sets for that line4.
  • The form of the goods. Bulk concentrate and bottled Scotch are being treated differently2.
  • Documentation supporting preferential treatment for every import since 15 July2.
  • Whether the same "compound alcoholic preparations" wording could apply to other bulk beverage inputs, since the entry as reported is not limited to whisky2.

Until the government publishes a clarification or a customs instruction, the assurance rests on sources rather than on a notified change.