Overview: Pernod Ricard faces a potential liability exceeding $600 million following a tax dispute in India regarding the declared value of imported Scotch whisky. The French spirits group withdrew its challenge from the Delhi High Court to pursue a statutory appeal, marking a significant financial risk for its largest market by volume.
The Full Story
The potential payout would exceed a third of Pernod Ricard’s €1.63 billion net profit in its 2025 financial year, underscoring the scale of the dispute for the maker of Chivas Regal, Ballantine’s and Absolut. The company has not abandoned its challenge to the tax demand but withdrew its case from the Delhi High Court after the government raised no objection. If Pernod Ricard loses the appeal and penalties are added, its total liability could exceed $600 million, about one-fifth of the $2.9 billion in revenue generated by its Indian business last year.
The four-year investigation centres on how Pernod Ricard declared the value of Scotch whisky imported into India. Indian authorities allege that the company withheld information about the composition and age of its whisky blends, allowing it to undervalue imports and reduce the customs duties it owed. Imported Scotch was subject to tariffs of as much as 150% during the period covered by the investigation. Investigators also alleged that Pernod Ricard deliberately complicated its disclosures by using internal codes for different malt components, making it more difficult for customs officials to assess the contents and value of the imported whisky.
The dispute comes as India becomes increasingly important to Pernod Ricard’s global business. India is the company’s largest market by volume and accounted for about 13% of group net sales in the first half of its 2026 financial year. Sales in the country rose 4% organically during the period, even as Pernod Ricard suffered sharp declines in the United States and China. International brands including Jameson, Ballantine’s and Absolut recorded double-digit growth, while Indian whisky brands Royal Stag and Blenders Pride posted mid-single-digit gains.
What This Means
The tax dispute comes at a difficult time for Pernod Ricard globally. In the first half of its 2026 financial year, reported sales fell 14.9%, while net profit declined 18% to €975 million. The company was hit by weaker demand in the United States and China, unfavourable currency movements and higher tariff costs. India remains one of the company’s clearest sources of growth, but the possibility of a payout exceeding $600 million highlights the risks attached to operating in a market where customs rules, state taxes, licensing regimes and regulatory investigations can have far-reaching financial consequences.
Consumer Takeaway
The news underscores the complexity of navigating India’s alcohol taxation system, where individual states control alcohol taxation, pricing, distribution and licensing. International drinks companies face national tariffs at the border, followed by state excise duties and other charges before their products reach consumers. The dispute involves Scotch whisky brands including Chivas Regal and Ballantine’s, which are central to the tax demand. While the India-European Union free trade agreement is expected to reduce some barriers after it is signed, ratified and brought into force, the reductions would not cover the Scotch whisky brands at the centre of the tax dispute.
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