Indian customs officials are examining whether bulk Scotch shipments imported by Pernod Ricard and Diageo were correctly classified for a reduced duty under the new India-UK trade agreement.
Indian tax officials are examining whether some bulk Scotch whisky imports by Pernod Ricard and Diageo were classified in a way that allowed the drinks makers to benefit from lower customs duties under the new India-UK trade pact, according to people familiar with the matter.
The scrutiny does not amount to a new tariff increase, nor does it imply that either company has broken the law. Instead, the dispute centres on which kinds of Scotch shipments qualify for the reduced rate that took effect when the bilateral agreement came into force on 15 July 2026. For eligible imports, the duty fell to 75% from 150%, a sharp cut in the tariff rate but not a halving of the final shelf price.
According to three people familiar with the matter, officers from India’s Directorate of Revenue Intelligence visited Pernod’s India headquarters near New Delhi last week and questioned executives about Scotch imports. The agency, known as the DRI, investigates smuggling, commercial fraud and customs duty evasion. Diageo’s Indian arm, United Spirits, said in a stock exchange filing that officials searched its premises in several locations on Friday as part of what it described as an industry-wide exercise, without specifying the subject of the checks.
Two of the sources said Diageo is also being looked at over the classification of some Scotch shipments. The core question, four of the people said, is whether the duty relief under the India-UK deal extends to bulk Scotch concentrates brought into India in containers and later blended with other ingredients for local brands. One source said officials are concerned that certain shipments may have been entered in a way that made them eligible for the lower rate, even if authorities later decide they do not qualify.
Pernod Ricard said it is cooperating with the DRI and providing the information requested, while Diageo said it is working with Indian authorities and has always complied with local law. United Spirits said it had supplied documents and explanations to officials. Neither company has been publicly accused of wrongdoing, and no tax demand has been announced in connection with the inquiry.
The matter has broader significance because India is one of the world’s most important spirits markets and both groups rely heavily on imported Scotch for premium and mid-priced products sold in the country. Industry data from Crisil Ratings this year suggested that the UK accounts for almost three-quarters of India’s imported spirits segment, largely because of Scotch whisky. That makes the scope of the tariff concession especially important for importers, distributors and domestic bottlers.
When the trade pact took effect in July, the British government said whisky and gin would benefit from India’s tariff changes and noted that UK whisky exports to India were worth more than £200 million in 2022. The current investigation does not challenge the existence of that concession. It focuses instead on how far the lower duty should extend, particularly to bulk or concentrated imports that are later used in local production.
The probe lands at a delicate moment for both companies in India. Pernod, which is already dealing with antitrust matters and contesting a separate $314 million back-tax claim tied to alleged undervaluation of imports, has denied wrongdoing in that case. Diageo, meanwhile, agreed in August to reformulate some of its best-known drinks after India’s food safety regulator barred them in parts of the country over flavouring rules. With no public estimate yet of the volume or value of the Scotch shipments under review, the financial exposure remains unclear and will depend on how Indian officials interpret the new customs framework.
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