India confirms lower duties on bulk Scotch imports under UK FTA
The Indian government has assured liquor manufacturers that bulk Scotch whisky imports will continue to qualify for reduced import duties under the India-UK free trade agreement. The clarification resolves a dispute over customs classification and supports margin growth for domestic players like United Spirits and Allied Blenders.
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Government assurances on bulk Scotch imports
The Indian government has confirmed it will honor its commitments under the India-UK free trade agreement (FTA) regarding the customs classification and import duties on bulk Scotch whisky. The clarification follows concerns raised by domestic liquor manufacturers about potential reclassification of bulk imports under a different Harmonized System of Nomenclature (HSN) code, which could attract a 150% duty instead of the reduced rate agreed in the FTA.
According to industry representatives, the government’s stance resolves ambiguity around the eligibility of bulk Scotch whisky for lower duties. The FTA, which came into effect on 15 July, lowered import duties on eligible Scotch whisky from 150% to 75%, with a phased reduction to 40% over the next decade.
Impact on domestic liquor manufacturers
Indian liquor companies, including United Spirits, Allied Blenders & Distillers, and Radico Khaitan, have begun seeing margin benefits from the reduced tariffs. Allied Blenders estimated a 70-basis-point improvement in gross margins for FY27 due to the lower duties.
Anant S Iyer, Director-General of the Confederation of Indian Alcoholic Beverage Companies (CIABC), stated that nearly 80% of Scotch whisky imports arrive in bulk and are bottled locally in India. This practice is expected to continue under the FTA’s provisions, as bulk imports remain classified as Scotch whisky and qualify for the lower duty.
However, the Directorate of Revenue Intelligence (DRI) had previously suggested that bulk Scotch concentrates should be classified separately, attracting the higher 150% duty. Industry executives, including Pradeep Jain of United Spirits, have dismissed this interpretation, citing long-standing customs practices.
Market growth and industry concerns
India’s whisky market continues to expand, with total consumption growing 3.7% to 268.8 million nine-litre cases in 2025. Scotch whisky, which accounts for a smaller but faster-growing segment, saw consumption rise 5.3% to 9 million cases, with a projected compound annual growth rate (CAGR) of 5.4% until 2030.
Industry leaders warned that imposing the higher 150% duty on bulk imports could undermine the FTA’s benefits and encourage the entry of lower-quality imported brands. Amar Sinha of Allied Blenders & Distillers and Dilip Banthiya of Radico Khaitan emphasized that the tariff reduction has already started supporting gross margins, with sequential improvements reported in the September quarter.
Related regulatory scrutiny
The dispute over bulk Scotch imports follows a recent investigation by Indian tax authorities into Pernod Ricard and Diageo for alleged misclassification of bulk Scotch imports under the India-UK trade agreement. That probe focused on whether the companies wrongfully claimed duty relief intended for specific categories of Scotch whisky, highlighting broader regulatory challenges in the sector.
What this means
Lazyfounder analysis — our interpretation, not reported fact.
For Indian liquor manufacturers and importers, the government’s clarification removes a significant operational risk. The confirmation that bulk Scotch whisky will retain its lower duty classification under the FTA ensures continuity for companies reliant on locally bottled imports, such as United Spirits and Radico Khaitan. This decision also reinforces the broader trend of trade agreements directly shaping cost structures in India’s alcoholic beverages industry—a dynamic founders in adjacent sectors, like agri-commodities or packaging, should monitor for similar opportunities or risks.
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Sources
- Mint (Technology) · 2026-11-02
Govt assures liquor makers it will honour scotch import commitments
This story is an original summary drafted with AI by Lazyfounder from the reporting listed above and checked by automated validation. Facts are attributed to their original publishers; sections marked as analysis are Lazyfounder's. Where a source is in another language, facts were machine-translated and quotations are reported, not reproduced. Read the original coverage via the links, and see our AI policy and corrections policy.
About the author
Editor, Lazyfounder
Tarun Mottlia edits LazyFounders, covering Indian startups, funding rounds, AI and product launches. Every story on the site is AI-assisted and checked against its cited sources before publication.
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