Business 3 min read By Bethany Hadley
India Investigates Pernod and Diageo Scotch Imports Under UK Trade Pact
Indian authorities are examining whether Pernod Ricard and Diageo have misused reduced tariffs on Scotch whisky imports under the India-UK trade agreement, according to people familiar with the matter.
India is investigating whether Pernod Ricard and Diageo have improperly benefited from reduced tariffs on Scotch whisky imports under the India-UK trade pact, according to people with knowledge of the matter. The probe adds a layer of uncertainty for the two global drinks groups in one of the world's fastest-growing spirits markets.
The investigation is understood to focus on whether the companies have correctly applied the rules of origin and tariff treatment for Scotch whisky brought into India under the agreement. The trade deal, which was designed to lower duties on a range of British goods, has been closely watched by drinks producers as a route to expanding their presence in India, where imported spirits have historically faced steep levies.
Pernod Ricard and Diageo are among the largest suppliers of imported whisky to India, and both have invested heavily in the market. Pernod's brands include Chivas Regal and Glenlivet, while Diageo owns Johnnie Walker and Singleton. Any finding of irregularity could lead to demands for additional duty and affect how the companies structure future shipments.
The sources did not specify the stage of the investigation or the volume of imports under review. Representatives for the companies and for India's customs authorities did not immediately respond to requests for comment. The trade ministry has not publicly addressed the matter.
The India-UK trade agreement was promoted by both governments as a way to deepen economic ties and reduce barriers for exporters. For the UK, Scotch whisky is a flagship export, and the deal was expected to give distillers easier access to a market where domestic and imported liquor are subject to complex taxation at both central and state level.
India's spirits market is dominated by locally produced whisky, but imported premium brands have gained ground among urban consumers. The investigation could complicate that growth if it leads to stricter scrutiny of import documentation and tariff classifications.
For Pernod and Diageo, India is a strategic priority. Both have faced regulatory and tax disputes in the country in the past, and the new probe underscores the compliance risks that accompany trade liberalisation. The companies have previously said they are committed to operating within local rules.
The outcome of the investigation will be watched by other exporters of British food and drink products who are relying on the trade pact to lower costs. If authorities take a strict view of the agreement's provisions, it could set a precedent for how tariff benefits are verified and enforced.
Neither company has commented publicly on the investigation, and it is not clear whether the review will result in formal action. The sources said the examination is at an early stage and may not lead to penalties.
7
