India has assured industry representatives that it will honour its trade agreement with the United Kingdom and work towards resolving a dispute over reduced import duties on bulk Scotch whisky, according to people familiar with discussions held on November 2, 2026.
The issue emerged after Indian tax authorities questioned whether Scotch whisky imported in bulk containers qualified for the reduced customs duty agreed under the India–UK trade pact. The agreement, implemented in July 2026, reduced the applicable tariff on Scotch whisky from 150% to 75%.
Editorial Insight
Key Highlights
Important points readers should notice.
Issue/Event: Dispute over the reduced import duty applicable to bulk Scotch whisky under the India–UK trade agreement.
Location: India and the United Kingdom.
Authority/Organisation: India's Commerce Ministry and the relevant trade and customs authorities.
Action Taken: Government officials assured industry representatives that the trade pact would be honoured and that steps were being considered to address the tariff interpretation issue.
Impact: A resolution could reduce uncertainty for international suppliers and Indian manufacturers that use bulk Scotch in blended products.
The disagreement created uncertainty for international liquor companies and Indian manufacturers that use imported Scotch as an ingredient in blended products. Companies including Diageo and Pernod Ricard were among those affected by the dispute, while Indian distillers also had business interests at stake.
At a meeting with industry executives, Commerce Ministry officials reportedly indicated that the government intended to honour the trade agreement. A government source said bulk Scotch imports were covered by the concessions, while Commerce Secretary Rajesh Agrawal reportedly stated that steps were being taken to ensure the duty benefit was not undermined.
The dispute centres on the interpretation of customs classifications and whether the tariff reduction applies equally to bottled Scotch and bulk imports. Industry representatives maintain that both forms should receive the agreed concession.
Editorial Analysis
Why This Matters
The dispute highlights how the interpretation of trade agreements can affect businesses even after a pact has formally come into force. For Indian manufacturers, bulk Scotch is an input used in producing blended whisky. Uncertainty over import duties can affect sourcing costs, pricing decisions and supply-chain planning. For international companies, clarity over tariff concessions is important when deciding how to structure imports and investments in the Indian market. The issue is also significant for India–UK economic relations because consistent implementation of agreed trade concessions can strengthen confidence among businesses on both sides.
Bulk Scotch is an important input for India's domestic spirits industry. It is used in the production of Indian-Made Foreign Liquor (IMFL) whisky, where Scotch is blended with other spirits and ingredients to create products for the Indian market.
The issue also has implications for India–UK trade relations. The United Kingdom and the Scottish government had raised concerns with New Delhi over the treatment of bulk Scotch imports.
Scotch exports to India were valued at approximately $335 million in 2024. The Scotch Whisky Association has estimated that the trade agreement could increase trade by $1.34 billion over five years.
Although the latest discussions indicate movement towards a possible resolution, the government has not publicly announced a final settlement. The precise implementation of the tariff concession will therefore remain important for businesses monitoring the agreement.
