Indian tax authorities are investigating whether liquor makers Pernod Ricard and Diageo wrongly classified bulk Scotch whisky imports to claim lower tariffs under the India-UK trade agreement. According to Reuters, citing five industry sources familiar with the matter, the investigation centres on whether the companies were eligible for the reduced import duty introduced under the pact, which came into effect on July 15. India agreed to cut tariffs on certain Scotch imports to 75 per cent from 150 per cent, but tax inspectors have argued that the duty reduction does not apply to bulk Scotch concentrates. Last week, tax inspectors visited Pernod Ricard's India headquarters near New Delhi and questioned company executives about its Scotch imports, with officials reviewing documents related to bulk imports during Thursday's visit. Diageo's Indian unit, United Spirits, confirmed in a stock exchange filing that its offices in multiple locations were searched on Friday as part of an 'industry-wide exercise' by authorities, without specifying the nature of the investigation.
A whistleblower complaint sent to Pernod Ricard India executives, government authorities, industry executives and Mint has raised questions about the French liquor maker's reported association with singer-actor Diljit Dosanjh's upcoming concert tour, which begins on 30 October. According to the anonymous and unsigned email, the complaint questions whether promoting the Chivas Luxe Collective perfume brand's logo could indirectly advertise alcohol, given that the product is not available for sale on any e-commerce platform. The complaint was also sent to Pernod Ricard chairman Alexandre Ricard. Pernod Ricard India sells alcoholic drinks across categories, including Chivas Regal and Ballantine's Scotch whiskies, Royal Stag and Blenders Pride whiskies, Jameson Irish Whiskey and Absolut vodka.
Promotional material posted on social media by ticketing platform BookMyShow lists Chivas Luxe Collective as a sponsor of Dosanjh's concert tour. As reported by Mint, the Diljit Dosanjh RuPay Aura India Tour, presented by Chivas Luxe Collective Perfumes, will begin on 30 October, covers seven cities including Ahmedabad in Gujarat—a dry state—and conclude in December. The complaint questions whether using the perfume brand in this way could indirectly promote Chivas Regal whisky, despite the perfume line being a separate product extension. Chivas Luxe Collective is Pernod Ricard's fragrance range, which the company introduced as an extension of the Chivas Regal brand in 2024 ahead of Diwali. The perfume line includes eau de parfum fragrances, with product labels listing Fraganote Fragrances Pvt. Ltd as the marketer and distributor, while Pernod Ricard India is identified as the licensee for the Chivas trademark.
Pernod Ricard India responded to Mint's detailed email, stating that the company is 'committed to responsible business practices and to complying with all applicable laws and regulations' across its operations. According to the company's statement, Chivas Luxe Collective Perfumes is a legitimate business operating within their Brand Extensions portfolio, with applicable eligibility requirements met and relevant brands duly registered with appropriate authorities. The company confirmed that their partnerships are conducted in accordance with applicable laws. Pernod told Reuters that it is 'cooperating with the Directorate of Revenue Intelligence and providing all information requested' and is committed to addressing any questions from the authorities. Diageo also confirmed it is 'cooperating with Indian authorities and has always complied with local laws' and provided all documents and clarifications in its stock exchange disclosure. The Delhi excise department has reiterated restrictions on direct and indirect advertising of alcohol in a circular dated 8 October, reminding liquor licensees that advertisements promoting alcohol are prohibited across digital and social media, hoardings, banners and other publicity material.
The complaint comes at a time when Pernod Ricard India is preparing for a potential initial public offering (IPO), with the company having begun legal preparations and steps to convert its Indian business into a public limited company. As reported by Mint, the company has yet to announce a listing timeline. Additionally, Pernod Ricard India does not currently hold a Delhi L-1 wholesale liquor licence, which allows companies to supply liquor through the wholesale distribution system. On 29 May, the Delhi High Court dismissed the company's challenge to the rejection of its L-1 licence application. The investigation comes amid longstanding disputes between foreign companies and Indian tax authorities over import classifications and tariff payments, with officials often raising substantial back-tax demands years after goods were imported. Pernod is already facing antitrust cases in India, its biggest market by volume, and a $314 million back-tax demand for allegedly undervaluing some imports, which the company denies wrongdoing.
The complaint raises questions about surrogate advertising practices in the alcohol industry, which are common at entertainment events. According to Mint's report, beer maker AB InBev has used Budweiser 0.0, its non-alcoholic beer, to build brand presence at large entertainment events including Lollapalooza India, where it backed the main stage and ran on-ground experiences. The brand has also leveraged its association with cricket, including the Twenty20 World Cup, to reach consumers through music and sport without promoting its alcoholic beer directly. Similarly, beer maker Kingfisher has built visibility through music festivals and sports partnerships, while Heineken uses global platforms such as Formula 1 and the Uefa Champions League, including activations around its non-alcoholic Heineken 0.0 brand. Diageo-owned Royal Challenge has also leveraged cricket through its association with Royal Challengers Bengaluru including a partnership involving Royal Challenge packaged drinking water. The UK accounts for almost 75 per cent of India's imported spirits market, primarily driven by Scotch whisky, with Crisil Ratings noting that the UK's whisky exports to India were worth more than £200 million in 2022.
