India Resolves Scotch Whisky Tariff Dispute With United Kingdom

The Government of India is working to resolve a trade dispute regarding import duties on bulk Scotch whisky under the India-UK Comprehensive Economic and Trade Agreement, which took effect on July 15, 2026. The pact reduced import tariffs from 150 percent to 75 percent, contributing to a nearly 1,000 percent year-on-year surge in bulk Scotch imports to $12.39 million in August 2026.

The conflict began when Indian tax officials argued that bulk shipments—which account for roughly 80 percent of UK whisky imports by volume—did not qualify for the reduction. Officials claimed these imports fell under a customs classification for compound alcoholic preparations, which attracts the original 150 percent duty. This led to office searches and the questioning of executives from global liquor firms including Diageo and Pernod Ricard.

Following interventions from the British and Scottish governments, Commerce Secretary Rajesh Agrawal met with industry executives on November 2. Agrawal assured the companies that the government would honor the trade agreement and is coordinating with the Finance Ministry to resolve the classification ambiguity. Industry groups had warned that the higher tariffs would undermine market access and harm the domestic manufacturing of Indian-Made Foreign Liquor.