The International Spirits and Wines Association of India (ISWAI), representing Diageo and Pernod Ricard, has escalated concerns about India's investigation into bulk Scotch imports. In a letter to India's commerce minister on Friday, October 24, ISWAI warned that the classification issue "risks undermining, in practice, an important market-access benefit negotiated and agreed between India and the United Kingdom." The association emphasized that "the preferential tariff treatment negotiated... could effectively become unavailable for these imports," highlighting the first significant dispute over the free trade agreement since it took effect on July 15, 2026. ISWAI declined to comment on its letter, while India's commerce ministry did not immediately respond. The British government responded that "We are working with the government of India to resolve this issue to ensure UK businesses can export under the tariffs agreed in the trade deal."
India's Directorate of Revenue Intelligence has opened an investigation into whether Pernod Ricard and Diageo misclassified bulk Scotch whisky shipments to claim the halved import duty under the India-UK trade agreement. According to Reuters, tax inspectors made an unannounced visit to Pernod's India headquarters near New Delhi in the week beginning October 12, questioning executives about Scotch imports and reviewing documents relating to bulk consignments. On Friday, October 16, search operations were initiated at multiple premises of United Spirits, Diageo's Indian listed subsidiary, with the company reporting no effect on its financial or operational activities. Authorities have privately told the companies that the reduced 75% tariff does not cover bulk Scotch concentrates, with those shipments required to be classified under a heading that still carries the full 150% duty. Four of five industry sources told Reuters that tax inspectors have argued the duty relief does not apply to bulk concentrates, with one source summarizing the department's position: "The tax department is concerned that bulk imports are being wrongly classified." Reuters reports that no wrongdoing has been established in the current investigation, and both companies say they are cooperating with authorities and comply with applicable laws.
India is rapidly emerging as a global powerhouse for Scotch whisky consumption, with the India-UK free trade agreement significantly accelerating this growth trajectory. According to the Scotch Whisky Association, Scotch whisky exports to India were worth £286 million (₹3,614 crore) in 2025, making it the world's largest market by volume but the third-largest by value, after the US and France. Exports were equivalent to about 220 million bottles and have been growing at 8-9% annually despite high import duties. India's whisky consumption grew 3.7% to 268.8 million nine-litre cases in 2025, while Scotch grew faster, up 5.3% to 9 million cases. The association projects that Scotch will grow at a compound annual rate of 5.4% between 2025 and 2030, against 3.6% for whisky overall. Mint reports that India may overtake the US as the world's largest market for Scotch whisky by export value, as lower import duties and rising incomes drive demand for premium spirits.
The tariff reductions are creating significant opportunities for premium Scotch whisky segments in India. Paul Ross, chief executive of Edrington India, expects retail prices of imported Scotch to fall by 7-10% as the lower basic customs duty feeds through to consumers. "That can only encourage people to trade up," Ross said. The shift towards premium spirits is already visible, with buyers increasingly willing to spend more on higher-end whiskies. Edrington has seen demand for 25- and 30-year-old expressions of The Macallan exceed expectations, while premium bottles are increasingly finding a place in consumers' home bars. India's single malt market stands at around 360,000 cases, of which the ultra-premium segment accounts for 75,000-80,000 cases. However, lower import duties will not translate into equivalent cuts in retail prices, as state excise duties, distribution costs and retail margins also affect the final price. Mint reports that Haryana could be among the first states to reflect the duty cuts in retail prices, followed probably by Delhi, as state authorities approve revised price lists.
Under the India-UK Comprehensive Economic and Trade Agreement (CETA), which entered into force on July 15, 2026, India agreed to cut import duties on qualifying UK-origin Scotch from 150% to 75% on the day the agreement took effect, with a further step-down to 40% over ten years. The Drinks Business reports that bulk imports make up 79% of Scotch shipments to India, according to a trade estimate attributed to The Economist. If the ruling confines the 75% rate to bottled-in-origin international labels like Johnnie Walker or Ballantine's, roughly four fifths of the trade flow would still face the full 150% levy. The British government said "iconic UK products" like whiskies would benefit from the pact, though Indian investigators have privately told companies the reduced rate does not apply to bulk Scotch concentrates. ISWAI noted that the India-UK agreement expressly provides preferential tariff treatment for whisky under the relevant tariff lines and urged urgent clarification to avoid uncertainty for legitimate industry participants. The UK-based Scotch Whisky Association told Reuters that the import of bulk Scotch is key to whisky's overall success in India and that upholding the core principles of the bilateral pact is vital.
Speaking at the NDTV World Summit 2026, Prasanna Mohile, National Head – Corporate Affairs and Executive Board Member at Pernod Ricard India, highlighted India's emergence as a key force in the changing global economic order. He emphasized that India is the Pernod Ricard Group's largest market by volume and second-largest by revenue, attributing the opportunity to changing consumer preferences, rising affluence and increasing appreciation for quality and premium products. Pernod Ricard India plans to invest over the next decade in establishing its largest malt manufacturing facility in Nagpur, aimed at strengthening local manufacturing capabilities and supporting the broader ecosystem including agriculture, sourcing, packaging, logistics and distribution. Citing an independent study by FTI Consulting, Mohile said the company's contribution to India's gross domestic product was estimated at approximately ₹43,000 crore, including direct, indirect and induced impacts, with its wider ecosystem supporting around nine lakh jobs. The company's Pernod Ricard India Foundation has impacted more than 1.6 lakh lives across India through initiatives in water security, sustainable agriculture, healthcare, education and community development.
