Overview: The Indian government has assured domestic liquor makers that it will honour commitments under the India-UK Free Trade Agreement regarding bulk Scotch whisky imports. This assurance follows a meeting between the Union commerce secretary and industry representatives from ISWAI and CIABC to resolve customs classification disputes. The resolution aims to ensure business continuity while safeguarding domestic interests.
The Full Story
The dispute centres on how bulk Scotch whisky imported into India should be classified for customs purposes. Under the FTA, import duty on eligible Scotch whisky fell from 150% to 75%, with a gradual reduction to 40% over 10 years. Industry bodies argue that bulk Scotch, which is imported in large quantities and bottled here, should qualify for the lower rate because it remains Scotch whisky, irrespective of how it is shipped. However, local tax authorities were exploring whether certain bulk imports should fall under a different Harmonized System of Nomenclature classification that attracts the higher duty.
The Union commerce secretary met industry representatives from the International Spirits & Wines Association of India and the Confederation of Indian Alcoholic Beverage Companies on Monday to discuss the issue. Industry officials were informed that the government would honour its commitments under the India-UK free trade agreement, including on imports of bulk Scotch which came into effect 15 July. Amar Sinha, managing director of Allied Blenders & Distillers Ltd, noted that the ministry’s commitment gives the sector confidence and looks forward to an early resolution that ensures business continuity.
Production & Profile
Approximately 80% of Scotch whisky imported into India arrives in bulk and is bottled locally while only about 20% comes in finished bottles. Foreign companies import whisky from Scotland in large containers, bottle it at Indian facilities as well as mix it to make IMFL or Indian manufactured foreign liquor and sell it in the domestic market. Indian spirits makers frequently utilize vatted spirits and blending techniques to make premium whisky products.
Brand & Industry History
The India-UK free trade agreement regarding Scotch imports came into effect on 15 July. In recent earnings calls, United Spirits Ltd, maker of McDowell’s, Allied Blenders, maker of Officer’s Choice, and Radico Khaitan Ltd reported on tariff reductions supporting gross margins. Tilaknagar Industries, though, said it had not received any benefit in the September quarter as it was still holding inventory.
What This Means
Lower import duties have started supporting margins for some companies, while the agreement could end up benefiting imported Scotch brands more than Indian liquor manufacturers if bulk imports are excluded from the duty concession. A potential 150% duty could erase the impact of the FTA and could also lead to more inferior imported brands coming into India. This development impacts the government’s Make in India push, as lower duties could make it cheaper to import fully bottled Scotch rather than bring in bulk spirit for local bottling.
Consumer Takeaway
The country’s whisky consumption grew 3.7% to 268.8 million nine-litre cases in 2025, while Scotch grew faster, up 5.3% to 9 million cases. Scotch is expected to grow at a 5.4% CAGR till 2030. The resolution ensures that the benefits of the FTA continue to support gross margins for companies like Allied Blenders & Distillers Ltd and United Spirits, maintaining availability in the domestic market.
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