NEW DELHI, Nov 2: India has assured representatives of the liquor industry that it remains committed to implementing tariff concessions agreed under its trade pact with the United Kingdom, seeking to resolve a dispute over the treatment of bulk Scotch whisky imports.
The assurance was conveyed during a meeting between senior government officials and industry executives on Monday, according to people familiar with the discussions. The development comes amid concerns that disagreements over the interpretation of tariff provisions could affect the implementation of the bilateral trade agreement.
India and the UK implemented their trade agreement in July 2026, under which import duties on Scotch whisky were reduced from 150 per cent to 75 per cent. The reduction was expected to improve market access for British producers and create opportunities for increased trade between the two countries.
However, a disagreement emerged over whether the lower tariff applied to whisky imported in bulk or was restricted to products bottled before entering the Indian market.
Indian tax authorities had recently questioned the eligibility of bulk Scotch imports for the reduced duty and initiated investigations involving major liquor companies. The action created uncertainty among international producers and domestic businesses that use imported Scotch as an ingredient in manufacturing Indian-made foreign liquor.
During Monday’s meeting, Commerce Secretary Rajesh Agrawal reportedly assured industry representatives that the government was taking steps to ensure the agreed tariff benefits were not undermined.
The discussions were aimed at addressing industry concerns and maintaining confidence in the trade agreement.
The dispute has attracted considerable attention because bulk Scotch whisky plays an important role in India’s domestic liquor manufacturing industry. Several Indian companies import Scotch in bulk and blend or process it locally before marketing the finished products.
The industry has maintained that the tariff concessions should apply to both bottled and bulk imports, arguing that excluding the latter would restrict the intended benefits of the agreement.
Major international companies, including Diageo and Pernod Ricard, have interests in the Indian market, while domestic manufacturers such as Radico Khaitan and Allied Blenders and Distillers also operate in the sector.
The investigations have reportedly affected several companies, with authorities examining import-related documentation and questioning executives as part of their inquiries.
For British producers, India represents an important growth market because of its expanding consumer base and rising demand for premium imported spirits.
The Scotch Whisky Association has consistently highlighted the potential of the Indian market and the importance of reducing trade barriers to increase exports.
Scotch whisky exports to India were valued at approximately USD 335 million in 2024. The industry association estimates that the India-UK agreement could generate an additional USD 1.34 billion in trade over five years.
The tariff reduction is expected to improve the competitiveness of British products in India, although the final impact will depend on how the agreement is implemented and whether the lower rates extend to different categories of imports.
The issue has also drawn diplomatic attention from Britain and Scotland, whose representatives have raised concerns with Indian authorities over the interpretation of the agreement.
Trade agreements generally require clear and consistent implementation to ensure that businesses can plan investments, imports and distribution arrangements without facing unexpected regulatory changes.
For companies operating in the liquor industry, uncertainty over import duties can affect pricing strategies, production costs and long-term supply contracts.
The latest assurance from New Delhi is therefore significant for businesses seeking clarity on the commercial provisions of the bilateral agreement.
The India-UK trade pact is intended to strengthen economic cooperation, expand market access and encourage investment across several sectors. Lower tariffs on selected goods are among its key components.
Both countries are seeking to increase commercial engagement at a time when global businesses are facing changing trade policies, geopolitical uncertainties and pressure to diversify supply chains.
While Monday’s meeting indicated the government’s willingness to address the industry’s concerns, the precise resolution of the bulk-import issue remains important.
Companies will be watching for further clarification from the relevant authorities regarding customs procedures and the eligibility criteria for reduced duties.
A clear resolution could help restore confidence among exporters and importers while supporting the broader objectives of the bilateral trade agreement.