Why Diageo and Pernod are under probe: India says bulk Scotch concentrate may not qualify for new lower tariff | Details
Indian investigators are examining whether Diageo and Pernod Ricard wrongly claimed a lower import duty on bulk Scotch concentrates after the India-UK free trade agreement took effect, according to details shared with the companies and a letter from their trade body.
The Directorate of Revenue Intelligence searched the offices of both firms this month and questioned executives as part of the probe. Authorities have privately told the companies that the reduced 75% tariff does not cover bulk Scotch concentrates. Those shipments, they say, must be classified under a heading that still carries the full 150% duty.
The case centres on how the companies import bulk concentrates from Britain and blend them in India to produce popular local brands such as Royal Stag, Blenders Pride and McDowell’s. Investigators are checking whether the firms misclassified these products to benefit from the lower rate introduced under the pact.
Pernod Ricard, which counts India as its largest market by volume, and Diageo have both said they are cooperating with the authorities.
Whisky duties were a major sticking point during the long negotiations that led to the agreement’s implementation on 15 July. India agreed to cut the import tax on certain Scotch shipments from 150% to 75% immediately and to lower it further to 40% over ten years. The British government had said “iconic UK products” like whiskies would benefit from the pact.
The International Spirits and Wines Association of India (ISWAI), which represents both companies, wrote to the commerce minister that the classification issue “risks undermining, in practice, an important market-access benefit negotiated and agreed between India and the United Kingdom.” The letter added that “the preferential tariff treatment negotiated... could effectively become unavailable for these imports.”
ISWAI noted that the India-UK agreement expressly provides preferential tariff treatment for whisky under the relevant tariff lines. It urged an urgent clarification so the negotiated gains can be realised “while avoiding uncertainty and disruption for legitimate industry participants.”
The probe has unsettled India’s roughly $65 billion alcohol industry. Britain supplies almost 75% of the country’s imported spirits, most of it Scotch, according to Crisil Ratings. Past tariff disputes have led to large back-tax demands on foreign firms, including Samsung and Volkswagen.
The immediate issue is whether bulk Scotch concentrates qualify for the 75% rate or must continue to pay 150%. An official clarification would resolve the uncertainty for the two largest foreign players in India’s spirits trade and show whether a publicly highlighted benefit of the India-UK deal applies in practice to the bulk shipments that feed many of the country’s best-known whisky brands.
Aachal Maniyar is a Senior Content Producer at LiveMint, where she covers US sports with a focus on major leagues, marquee events, and athlete-driven stories, while also reporting extensively on cricket and global sports. With over five years of first-hand journalism experience, she combines sharp editorial judgment with real-time sports storytelling across platforms. <br><br> Her reporting journey spans leading newsrooms including Thomson Reuters, India TV, BTVI, ET NOW, and CNBC TV18, where she has worked across breaking news, live match coverage, feature writing, interviews, video scripting, and anchoring. This multi-platform exposure has shaped her ability to deliver context-rich sports and business journalism tailored for both television and digital audiences. <br><br> Aachal has conducted and produced exclusive interviews with athletes and public figures such as India cricketer Dhruv Jurel, Indian women’s hockey captain Savita Punia, and industrialist Ratan Tata, along with several emerging and established sports personalities. Her body of work includes in-depth explainers, athlete profiles, emotionally resonant fan narratives, and data-backed match analysis across cricket, Olympic sports, and international competitions. <br><br> She holds a Master’s degree in Journalism from Symbiosis Institute of Media and Communication, Pune, and believes in reporting that is grounded in accuracy, clarity, and credibility. Her philosophy is simple: sports journalism should go beyond scores and statistics, capturing the human stories, pressure moments, and decisions that shape the game and the people who play it.
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More
✕
Wait for it…
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.