India's commerce ministry will meet foreign and domestic liquor executives behind closed doors on Monday, 2 November, to discuss bulk Scotch, according to four people with direct knowledge of the meeting2. The ministry did not immediately respond to a request for comment2.
The meeting follows a month of visits and searches at Pernod Ricard, Diageo's Indian unit and Radico Khaitan4, 5, 6. Investigators have told companies that bulk Scotch concentrate does not get the 75% import duty agreed under the India-UK trade pact, and must be cleared at 150%2, 1. The companies disagree1.
The dispute is the first significant one under the pact, which took effect on 15 July 20262, 7. For buyers outside the drinks trade, the interest lies in the mechanism: a concession that attaches to a product form, not to a brand or a supplier.
A classification dispute, not a notified exclusion
No notification or formal order setting out the exclusion has been reported. The position has been conveyed privately by investigators1, 8. India has not commented on the matter2.
The agreement cut Indian duty on UK whisky and gin from 150% to 75% when it took effect, with the rate due to fall to 40% over 10 years1, 7, 3. ISWAI, the lobby group for Pernod and Diageo, wrote to the commerce minister that the deal covers whisky. The agreement "expressly provides preferential tariff treatment for whisky under the relevant tariff lines", it wrote, and the reading means the preference "could effectively become unavailable for these imports"1.
Investigators do not argue that whisky sits outside the deal. Their case is about form. A container of concentrate, on their reading, belongs under a customs entry that still attracts 150%, rather than the one carrying the concessional rate1. Bottled Scotch cleared as whisky pays 75%; the concentrate that distillers mix with other ingredients to make Royal Stag, Blenders Pride and McDowell's, they say, pays the old rate1, 6.
The agreement's rules of origin, as summarised in public, require goods to be wholly obtained or significantly transformed in either country. They also include a specific rule under which spirits distilled in Northern Ireland from imported grain can be bottled during their journey to India and still claim preference7. That rule suggests negotiators expected bulk spirit to move under preference.
The companies in the file
Officers from the Directorate of Revenue Intelligence visited Pernod's India headquarters near New Delhi and questioned executives6. United Spirits, Diageo's Indian unit, told the stock exchange that its offices in several locations were searched on 16 October, in what it called an "industry-wide exercise"4, 6. On 27 October, DRI officials went to Radico Khaitan's Delhi office and to a plant and a second office in Uttar Pradesh5. Radico said the visits had no impact on its financial or operational activities5.
Maharashtra's Commissioner of State Tax ran a separate search at United Spirits, starting on 19 October and ending on 29 October4. The company said the search had no impact on its financial or operational activities4.
All the companies have said they comply with the law2. Pernod said it is cooperating with the directorate6. Back-tax claims are a long-running feature of Indian customs cases: Pernod already faces a $314 million demand over alleged undervaluation of imports, which it denies1, 6. Indian officials say they are only enforcing the law of the land2.
The trade at stake
India's alcohol market is worth about $65 billion2, 1. Britain supplies almost 75% of India's imported spirits, mostly Scotch, according to Crisil Ratings1.
Scotch whisky exports to India were worth £286 million in 2025, about 220 million bottles, according to the Scotch Whisky Association. That makes India the largest market by volume and the third largest by value3. About 80% of the trade by volume is shipped in bulk, with the rest sold bottled2, 3.
The cost falls on mainstream brands. Bulk concentrate is the base for Royal Stag, Blenders Pride and McDowell's1, 6. Allied Blenders, the CIABC member behind Officer's Choice, describes itself in an investor presentation as "one of the largest bulk Scotch importers"2. A return to 150% would hit a segment already under pressure. United Spirits' popular net sales value fell 22.7% to Rs 181 crore in the September quarter, hurt by state tax changes in Maharashtra and Karnataka9.
Why the form matters
CIABC, whose members include Radico Khaitan and Allied Blenders, made the argument in a confidential letter on 27 October. Excluding bulk Scotch used in Indian manufacturing "could create an unintended incentive in favour of importing finished products", it said2. Such an outcome "would run counter to the objective of strengthening domestic manufacturing under Make in India", it added, and asked for urgent intervention2.
The lesson for importers under any Indian trade deal is to check the tariff line, not the product family. Where the form of the import falls outside the description on the concessional line, duty can revert to the full rate, and the bill can be raised years later1, 6.
What to watch
Britain says it is working with India "to resolve this issue to ensure UK businesses can export under the tariffs agreed in the trade deal"1. Scotland's government has raised the treatment of bulk Scotch with New Delhi, and the Scotch Whisky Association says bulk imports are key to whisky's success in India2, 1.
The first signal will come from Monday's meeting. Industry has asked for an urgent clarification, with ISWAI warning of uncertainty and disruption for legitimate importers, and CIABC seeking urgent intervention to avoid disruptions2, 1. The talks could produce a clarification that brings concentrate back inside the concession, or nothing, in which case investigators continue to apply the classification as companies describe it2, 1. A written clarification, or a customs circular, would settle future consignments; none has appeared so far2, 1.