 |
An illustrative image of premium Scotch whisky bottles accompanies India's investigation into whether Pernod Ricard and Diageo misclassified bulk Scotch imports to qualify for lower tariffs under the UK trade pact.
India Probes Pernod Ricard and Diageo Over Scotch Imports Under UK Trade Pact
NEW DELHI — October 19, 2026
Indian tax authorities are investigating whether liquor companies Pernod Ricard and Diageo incorrectly classified some bulk Scotch whisky imports to qualify for lower import duties under a recently agreed trade pact between India and the United Kingdom, five industry sources familiar with the matter told Reuters.
The investigation focuses on how the companies declared bulk Scotch imports for customs purposes after India reduced tariffs on certain Scotch imports under the trade agreement. Tax officials reportedly argue that the lower duties do not apply to bulk Scotch concentrates.
The agreement took effect on July 15 and reduced import duties on certain Scotch products to 75%, from 150%. The dispute concerns whether bulk imports used to produce blended alcoholic drinks qualify for the tariff reduction.
Three sources said tax inspectors visited Pernod Ricard’s Indian headquarters near New Delhi last week and questioned company executives about Scotch imports. The inspectors also reviewed documents related to bulk imports, one source said.
Diageo’s Indian subsidiary, United Spirits, disclosed last week that authorities had searched its offices at multiple locations on Friday as part of what it described as an “industry-wide exercise.” The company did not specify the subject of the searches. Two sources said Diageo was also being investigated over the classification of some Scotch imports.
Both companies said they were cooperating with Indian authorities. Pernod Ricard said it was providing the information requested by the Directorate of Revenue Intelligence and was committed to addressing the authorities’ questions. Diageo said it had complied with local laws and was cooperating with officials. United Spirits also said it had supplied documents and clarifications.
India’s revenue intelligence directorate did not immediately respond to a request for comment.
Pernod Ricard, a French company, and Britain’s Diageo are major players in India’s alcoholic beverages market, valued at about $65 billion. Both import bulk Scotch whisky concentrates, which are mixed with other ingredients to produce popular brands, including Royal Stag, Blenders Pride and McDowell’s.
The classification of imported goods has long been a source of disputes between foreign companies and Indian tax authorities. Such cases can lead to substantial demands for back taxes, sometimes years after goods have entered the country. Indian officials generally argue that they are enforcing existing tax laws.
The UK accounts for almost 75% of India’s imported spirits market, largely because of Scotch whisky, according to Crisil Ratings. The British government previously described whisky and gin as iconic UK products that would benefit from India’s tariff changes. British whisky exports to India were worth more than £200 million in 2022, according to the UK government.
The investigation adds to existing challenges for both companies in India. Pernod Ricard is facing antitrust cases and a separate $314 million back-tax demand over allegations that it undervalued certain imports. The company denies wrongdoing.
Diageo, meanwhile, agreed in August to reformulate some popular drinks after India’s food safety regulator banned them in certain states over the use of flavours that it said breached regulations.
The latest inquiry remains focused on the classification of bulk Scotch imports and whether the reduced duties apply. The supplied report does not indicate that authorities have reached a final conclusion or announced penalties in this case.
