India Seeks Resolution to Scotch Whisky Import Duty Dispute

India’s Finance and Commerce Ministries are discussing a customs classification dispute that has held dozens of containers of bulk Scotch whisky at Indian ports. The shipments include those of Pernod Ricard and Diageo. The dispute concerns preferential duty under the India-UK Comprehensive Economic and Trade Agreement (CETA), implemented on 15 July 2026.

Dispute over customs classification

Importers argue that bulk Scotch falls under Chapter 22, Heading 2208, for spirits and whisky, and qualifies for a 75% duty. The Directorate of Revenue Intelligence (DRI) is seeking the 150% rate, arguing that the imports are not finished whisky and may be classified as food preparations under Chapter 21, Heading 2106. CETA reduced the duty on qualifying Scotch from 150% to 75%, with a phased reduction to 40% by the tenth year.

On 2 November, the Commerce Ministry assured liquor industry executives that the government would honour the pact and seek an early resolution. A DRI memo dated 4 November directed customs commissioners to continue applying the 150% rate to bulk shipments. The International Spirits and Wines Association of India and the Confederation of Indian Alcoholic Beverages Companies have raised the issue with the Commerce Department.

Use in Indian manufacturing

Bulk Scotch accounts for about 80% of UK whisky imports to India by volume. Indian manufacturers blend it with domestic malt spirits to produce Indian-made whiskies. Industry representatives say the duty dispute could affect domestic value addition.

Important Facts for Exams

• HS code structure: The Harmonized System code has six digits: successive two-digit pairs identify the chapter, heading and subheading.
• Preferential origin rule: Under the India–UK agreement, preferential tariffs require goods to be wholly obtained or significantly transformed in either country.
• Customs release deadline: The agreement requires customs authorities to release shipments within 48 hours when no physical inspection is required.