India has told drinks companies it will settle a dispute over bulk Scotch in line with its trade deal with Britain, after the country’s own whisky makers joined foreign rivals in protesting a customs ruling that charged bulk Scotch twice the duty paid on bottled Scotch. The India-UK agreement cut India’s duty on Scotch from 150% to 75%, but authorities had told companies that Scotch shipped in bulk for blending did not qualify and must pay the full rate.
At a closed-door meeting with executives of foreign and domestic liquor companies on 2 November, commerce ministry officials said New Delhi would honor the pact in letter and spirit. Commerce Secretary Rajesh Agrawal told attendees that steps were being taken “so that the duty concession on bulk Scotch whisky is not impaired.” No formal change to the customs position has yet been announced.
The Confederation of Indian Alcoholic Beverage Companies (CIABC), whose members include Radico Khaitan, maker of 8PM, and Allied Blenders and Distillers, maker of Officer’s Choice, joined the protest in a confidential letter dated 27 October. It is a reversal for a lobby that in September 2020, when New Delhi said it was open to lowering the 150% duty, insisted any cut “must be gradual, in a controlled manner, in order to provide reasonable protection to Indian companies.”
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READ THE STORYThe lobby has changed sides because around 80% of the Scotch India buys from Britain by volume arrives in bulk to be blended into Indian brands, which makes it an ingredient of domestic manufacturing rather than a rival to it.
How the Bulk Scotch Tariff in India Split From the Trade Deal
The India-UK agreement took effect on 15 July 2026. It cut India’s duty on Scotch from 150% to 75% at once, with a phased reduction to 40% over ten years. Indian authorities have since told companies that bulk Scotch “concentrates” do not qualify for the 75% rate and must be declared under a customs classification carrying the full 150% duty.
India has not commented publicly on the classification. Revenue intelligence officers searched company premises over the classification in October, as we reported on 23 October. Maharashtra tax authorities also searched United Spirits premises from 19 to 29 October, although no formal finding of liability has been announced.
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The uncertainty already reaches the supply chain. Companies have asked licensees and distributors for bank guarantees equal to 75% towards customs duty in case imports are assessed at 150%.
Why Bulk Scotch Is a Raw Material for Indian Whisky
Scotch exports to India reached 53.7 million liters of pure alcohol in 2024, when India regained its place as the largest Scotch export market by volume. Bulk malt, bulk blend and bulk grain together made up 43.2 million of those liters, while bottled blends came to 9.3 million and single malts to just 1.2 million. India alone took 70% of all bulk malt Scotch exported that year.
Most Indian whisky is built on neutral spirit distilled from molasses. This is a legacy of the license-permit era, when grain was barred from spirits production until 1995. Blending in a share of Scotch, which has already had its statutory three years of maturation in Scotland, gives these whiskies character without the cost of aging stock in a hot climate. Diageo and Pernod Ricard blend imported Scotch into McDowell’s No.1, Royal Stag and Blenders Pride. Bulk Scotch has long been part of the Indian trade: Teacher’s and Vat 69 were already being shipped in bulk to be diluted and bottled in India in 2003.
India’s Domestic Blenders Turn Against the 150% Duty
CIABC’s letter argues that excluding bulk “could create an unintended incentive in favour of importing finished products,” an outcome it says “would run counter to the objective of strengthening domestic manufacturing under Make in India.” The commercial logic is plain, since a blender paying 150% on its Scotch now competes against bottled imports paying 75%.
Allied Blenders, which describes itself in investor material as “one of the largest bulk Scotch importers,” had expected the pact to improve its “luxury portfolio accessibility.” The International Spirits & Wines Association of India counts Diageo and Pernod Ricard among its members. It has told the commerce minister that the classification “risks undermining, in practice, an important market-access benefit negotiated and agreed between India and the UK.”
London is pressing too. The UK Department for Business and Trade says, “We are working with the government of India to resolve this issue to ensure UK businesses can export under the tariffs agreed in the trade deal.” The Scottish government has separately raised the treatment of bulk Scotch with New Delhi.
What Happens Next With the Bulk Scotch Tariff
The 75% rate on bottled Scotch was never in dispute, and neither was the ten-year path to 40%. The argument was over the much larger bulk trade, in an alcohol industry worth $65 billion and a market where the UK supplies nearly 75% of imported spirits.
The assurance stops short of a formal ruling. Until the customs authorities change their position in writing, bulk imports remain open to assessment at 150%, which is the risk the bank guarantees sought from licensees and distributors were put up to cover.
For years the case for high duties on Scotch was made in the name of India’s own whisky makers. This time it was those makers who pushed for Scotch arriving in tankers to be treated as part of India’s own whisky industry, and New Delhi has signalled it agrees.
