India moves to resolve Scotch tariff dispute, assures 75% duty on bulk imports: Report

The government has moved to resolve a dispute over Scotch whisky imports under the UK trade pact, assuring liquor companies that bulk shipments qualify for the reduced 75 percent import duty after tax officials questioned their eligibility for the concession.According to a Reuters report citing six people with direct knowledge of the matter, commerce ministry officials gave the assurance during a closed-door meeting with liquor industry executives on Monday, saying New Delhi would honour the trade agreement in letter and spirit.One government source said, "We are potentially moving towards a resolution. Bulk Scotch whisky imports are indeed part of concessions under the trade deal."A second source said commerce secretary Rajesh Agrawal told attendees that necessary steps were being taken to address the issue "so that the duty concession on bulk Scotch whisky is not impaired".The dispute centres on the agreement to reduce import duty on Scotch whisky in India from 150 per cent to 75 percent under the India-UK Comprehensive Economic and Trade Agreement (CETA), which came into effect in July 2026. However, tax officials had told liquor companies that the reduced duty did not apply to Scotch imported in bulk containers.The disagreement is significant because around 80 percent of Scotch whisky shipped to India arrives in bulk rather than in finished bottles.These imports are used by Indian manufacturers to produce Indian-Made Foreign Liquor (IMFL) whisky by blending Scotch with other spirits and ingredients. The industry maintains that both bottled and bulk Scotch imports should qualify for the reduced tariff under the trade agreement.The dispute has affected major liquor companies, including Diageo and Pernod Ricard, as well as Indian manufacturers Radico Khaitan and Allied Blenders and Distillers. Tax officials searched the offices of several companies in recent days and questioned executives over the classification and eligibility of bulk Scotch imports.The issue has also drawn attention from Britain and Scotland. The British government said it was working with New Delhi to resolve the matter, while the Scottish government separately raised concerns over the treatment of bulk Scotch imports.Scotch exports to India were valued at $335 million in 2024, and the Scotch Whisky Association has projected that the trade agreement could increase exports by an additional $1.34 billion over five years.You use AI every day. Now get your AI Quotient. Take the AIQ test.