New Delhi, November 2 — India on Monday assured liquor industry executives that it would honour its trade pact with Britain and resolve a dispute over Scotch whisky tariffs, Reuters reported, citing six people with direct knowledge of the matter. The dispute is the first major one linked to the landmark India-UK trade pact, which was implemented in July.

Source: Reuters via Devdiscourse

At a closed-door meeting on Monday, Commerce Ministry officials told the executives that New Delhi would honour the pact in letter and spirit. "We are potentially moving towards a resolution. Bulk Scotch whisky imports are indeed part of concessions under the trade deal," one government source familiar with the discussions told Reuters. A second government source said Commerce Secretary Rajesh Agrawal told attendees that necessary steps were being taken "so that the duty concession on bulk Scotch whisky is not impaired". India's Commerce Ministry did not immediately respond to a request for comment, Reuters said.

Industry publication Ambrosia India independently reported the same meeting, saying the Commerce Secretary and his team met representatives of alcobev industry associations in New Delhi on November 2 and assured them the government would honour its commitments under the India-UK Free Trade Agreement on bulk Scotch imports. The ministry also indicated it would work with the Ministry of Finance to resolve the classification issue within the existing legal framework, the publication reported.

Source: Ambrosia India

"We thank the Commerce Secretary, his team and the Government of India for a constructive meeting and for their assurance to the industry to resolve the matter. The Ministry's commitment to honour FTA obligations, while safeguarding the interests of domestic alcobev industry, gives the sector the confidence it needs," Confederation of Indian Alcoholic Beverage Companies (CIABC) Director General Anant S Iyer said, according to Ambrosia India.

How the dispute began

The assurance follows the earlier development reported in recent weeks: Indian tax officials launched investigations into major liquor companies, searched offices and questioned executives, and told companies that bulk Scotch imports were not eligible for the tariff cut to 75 per cent from 150 per cent agreed under the deal. The disagreement centres on customs classification — tax inspectors have argued the lower tariff should not apply to Scotch imported in bulk containers, while the industry argues all Scotch whisky imports, bottled or bulk, should qualify.

Bulk Scotch is a crucial input for the industry because it is used to produce Indian-Made Foreign Liquor (IMFL) whisky, made by blending Scotch with other spirits and ingredients. A resolution would come as a relief for market leaders Pernod Ricard and Diageo as well as Indian distillers Radico Khaitan and Allied Blenders and Distillers, Reuters reported. The companies did not respond to Reuters queries.

Britain has said it is working with India on the issue, and the Scottish government also raised the treatment of bulk Scotch imports with New Delhi in recent days, Reuters reported. No formal public notification changing the classification had been reported by Monday evening; the assurance rests on accounts of the closed-door meeting from people with direct knowledge and on the industry association's on-record response.