Indian Customs Detains Bulk Scotch Containers Amid Tariff Dispute Under India-UK Pact

Indian customs authorities have detained dozens of containers of bulk Scotch imported by major beverage companies, including Pernod Ricard and Diageo, as investigators press for a 150 percent tariff. The enforcement action occurs despite prior assurances from New Delhi regarding lower duties under the India-UK trade pact that took effect in July.

This marks the first major dispute linked to the bilateral trade agreement. Customs investigators have ordered the higher tariff rate, arguing that bulk Scotch concentrates—which are utilized to manufacture whisky brands—do not qualify for the pact's reduced 75 percent duty. According to investigators, the lower rate is exclusively applicable to finished, ready-to-drink bottled Scotch products.

The dispute escalated following conflicting signals from government bodies. On November 2, 2026, India's commerce ministry assured senior executives that the government would honor the trade agreement and resolve the matter swiftly. However, a subsequent confidential memo issued by the finance ministry's Directorate of Revenue Intelligence on November 4 instructed customs commissioners across the country to maintain a different stance.

The revenue directorate memo stated that importers were incorrectly claiming benefits under the India-UK pact for bulk Scotch. It classified the imports under compound alcoholic preparations, which attract a 150 percent tariff under a customs classification effective since May 1. The memo cautioned that misclassification carries substantial, recurring revenue implications and directed officials to enforce the higher duty.

Neither the finance ministry, the commerce ministry, nor the revenue directorate responded to media queries. However, a senior finance ministry source noted that both ministries are currently in discussions to determine an appropriate resolution.

Major industry players, including Pernod Ricard and Diageo, did not reply to requests for comment. Industry sources indicate that Pernod and Diageo each have more than 40 containers held up at ports, while Bacardi has five containers on hold. Prolonged delays at the ports threaten to disrupt supply chains. In recent weeks, tax officials have also searched the offices of several companies and questioned executives regarding the matter.

The International Spirits and Wines Association of India has privately warned that the dispute risks undermining market-access benefits negotiated between India and the United Kingdom. Approximately 80 percent of Scotch whisky imports from Britain by volume arrive in bulk to produce Indian-Made Foreign Liquor, which blends small quantities of Scotch with other spirits. Scotch exports to India totaled $335 million in 2024, with the Scotch Whisky Association forecasting potential growth of $1.34 billion over five years under the trade agreement.

"This situation highlights a classic regulatory friction point where international trade agreements intersect with domestic revenue enforcement. For multinational enterprises and growing businesses alike, regulatory clarity across different government departments is essential. When trade pacts and tax directorates issue conflicting directives, it creates operational bottlenecks and supply chain uncertainties. Policymakers and industry stakeholders must establish clear administrative frameworks to ensure that bilateral agreements deliver their intended economic benefits without operational disruption." — Dr. Shishir Gupta, Founder & CEO, StartupLanes