By The Worldonomics Times | Global Economy
Date: 3 November 2026
India Moves to Resolve Disagreement Over Scotch Whisky Tariffs
India and the United Kingdom are working towards resolving a trade disagreement over reduced import duties on Scotch whisky under their recently implemented Comprehensive Economic and Trade Agreement (CETA). The dispute centres on whether the tariff concessions negotiated under the agreement apply equally to Scotch whisky imported in bulk containers and whisky imported in retail bottles.
The issue has attracted attention from international liquor companies, Indian manufacturers and trade representatives on both sides. It has also become an early test of the implementation of the India–UK trade agreement, which entered into force on 15 July 2026.
On 2 November, India’s Commerce Ministry officials met representatives of domestic and international liquor companies to discuss the matter. According to reports, Commerce Secretary Rajesh Agrawal assured industry representatives that India would honour its commitments under the agreement and take necessary steps to ensure that the negotiated tariff concessions were not undermined. The discussions indicated that both sides were moving towards a possible resolution, although the customs investigations and classification questions remain important.
Understanding the Scotch Whisky Tariff Agreement
Under the India–UK trade agreement, India agreed to reduce import duties on eligible Scotch whisky from 150% to 75% when the agreement came into force. The tariff is scheduled to decline further in stages over the following ten years, eventually reaching 40%.
The reduction represents a significant change for British whisky exporters, who have historically faced high import duties in the Indian market. Lower tariffs are expected to improve the competitiveness of Scotch whisky, create opportunities for British distillers and provide Indian consumers with greater access to imported premium spirits.
The UK government has described the agreement as an important opportunity for British businesses seeking access to India’s large and expanding consumer market. Scotch whisky is among the prominent British exports expected to benefit from the improved trade conditions.
However, the current disagreement concerns the interpretation of the tariff provisions rather than the overall reduction agreed by both governments.
Bulk Scotch Imports at the Centre of the Dispute
A major share of Scotch whisky entering India arrives in bulk containers rather than in retail bottles. These imports are used by Indian companies for blending, bottling and manufacturing whisky products for domestic consumers.
Industry estimates suggest that approximately 80% of Scotch whisky imported from Britain by volume arrives in bulk. Consequently, the treatment of bulk shipments has substantial commercial implications for both British exporters and Indian liquor manufacturers.
The disagreement emerged after Indian tax and customs authorities reportedly questioned whether bulk Scotch whisky should qualify for the reduced tariff. Investigators informed certain companies that the lower duty might not apply to bulk imports and examined whether some shipments had been incorrectly classified for customs purposes.
The industry has challenged this interpretation, arguing that Scotch whisky remains whisky regardless of whether it is imported in a retail bottle or a larger container for further processing. Companies maintain that excluding bulk shipments would weaken the commercial benefits of the agreement.
The dispute also involves customs classification codes. Industry representatives argue that bulk Scotch should be classified under the specific tariff category for whisky rather than a separate category for beverage-making preparations. The government has been asked to clarify the classification within the framework of the law and the trade agreement.
Impact on International and Indian Liquor Companies
The disagreement has created uncertainty for major international companies operating in India’s alcoholic beverages market, including Diageo and Pernod Ricard. These companies have significant business interests in the country and rely on imported Scotch whisky for their premium product portfolios.
Indian manufacturers are also concerned about the potential consequences. Companies such as Radico Khaitan and Allied Blenders and Distillers use imported spirits in parts of their production and premiumisation strategies. Industry representatives argue that restricting tariff benefits for bulk Scotch could increase input costs and affect domestic manufacturing operations.
The Confederation of Indian Alcoholic Beverage Companies (CIABC) and other industry representatives have raised concerns about the customs interpretation. They have called for clarity to ensure that the agreement provides a predictable environment for companies investing in production, imports and distribution.
A further concern is that excluding bulk imports from preferential treatment could encourage greater imports of finished bottled whisky instead of supporting local bottling and value addition. This could affect domestic manufacturing activity and the employment opportunities connected with it.
Diplomatic Engagement Between India and the UK
The issue has also attracted diplomatic attention. British officials have indicated that they are working with India to resolve the disagreement. Scotland’s First Minister John Swinney raised concerns about the treatment of bulk Scotch whisky during his visit to India between 20 and 27 October 2026.
The Scottish government has emphasised the importance of ensuring that Scottish exporters can benefit from the trade agreement. Although trade negotiations and policy are handled by the UK government, Scotland has a significant commercial interest in promoting its whisky industry internationally.
The disagreement comes after both countries highlighted the early progress of the trade agreement at the India–UK Joint Economic and Trade Committee meeting held in New Delhi on 12 October. Officials from both governments welcomed initial business activity under the agreement and agreed to strengthen cooperation to address implementation challenges.
Economic Opportunities and Future Trade Relations
The commercial importance of the agreement extends beyond whisky. The wider trade framework aims to improve market access for goods and services, encourage investment and strengthen economic cooperation between the two countries.
Scotch exports to India were valued at approximately US$335 million in 2024. The Scotch Whisky Association has estimated that the trade agreement could increase this trade to around US$1.34 billion over five years, although this remains an industry projection rather than a guaranteed outcome.
A clear resolution of the tariff disagreement could help restore confidence among exporters and importers. It would also demonstrate that both governments are prepared to address practical difficulties without allowing them to undermine the broader economic partnership.
The Worldonomics Times Views
The Scotch whisky tariff disagreement highlights the importance of clear implementation mechanisms in international trade agreements. Negotiating lower tariffs is only one part of building a successful trade partnership; businesses also require consistent customs classifications, transparent regulations and predictable enforcement.
India must honour its agreed trade commitments while ensuring that customs procedures are applied correctly and domestic industry concerns are considered. Similarly, British exporters need to understand the regulatory requirements governing access to the Indian market.
A balanced resolution should protect the benefits negotiated under the agreement while providing clarity to Indian manufacturers, international companies and consumers. Both governments should prioritise dialogue and technical cooperation to prevent an implementation issue from becoming a wider trade dispute.
Conclusion
India’s efforts to address the Scotch whisky tariff disagreement represent an important development in the implementation of the India–UK trade agreement. The dispute over bulk imports has raised questions about customs classification, business confidence and the practical benefits of tariff reductions.
The recent discussions between Indian officials and industry representatives have offered signs of progress, but a clear and consistent resolution remains necessary. The outcome will matter not only to the whisky industry but also to the credibility of the wider India–UK economic partnership.
