India to Meet Liquor Firms as Domestic Giants Join Scotch Tariff Dispute
The first big dispute under the India-UK trade pact is about bulk Scotch: 80% of imports arrive that way, and both foreign and domestic makers now want the lower tariff applied.
Highlights
- India’s government will hold talks with liquor companies on Monday after domestic firms joined Diageo and Pernod in the bulk Scotch dispute
- New Delhi has told major companies that bulk Scotch imports are not eligible for the tariff reduction to 75% from 150% agreed in the India-UK trade deal
- Around 80% of Scotch whisky imports from Britain by volume arrive in bulk, for use in popular Indian-made brands
- The Confederation of Indian Alcoholic Beverage Companies flagged a hit to domestic manufacturing in an October 27 letter
- It is the first major dispute linked to the historic India-UK trade pact implemented in July
The trade deal’s first big test
India’s government will hold talks with liquor companies on Monday after domestic firms joined Diageo and Pernod in expressing alarm about a federal investigation into bulk Scotch imports, according to four sources and an industry letter Reuters.
In the first major dispute linked to the historic India-UK trade pact implemented in July, New Delhi has told major companies that bulk Scotch imports are not eligible for the tariff reduction to 75% from 150% agreed in the deal Reuters.
Why bulk imports are the whole argument
Around 80% of Scotch whisky imports from Britain by volume arrive in bulk to be used to make popular brands, and India’s $65 billion alcohol industry had hoped the cut in tariffs would bolster business Reuters. Excluding bulk imports therefore excludes most of the trade the tariff cut was expected to liberalise.
The International Spirits & Wines Association of India, representing Pernod and Diageo, has privately warned New Delhi that excluding bulk Scotch could undermine the pact; the Confederation of Indian Alcoholic Beverage Companies (CIABC) has now joined the protest by flagging a hit to domestic manufacturing, in an October 27 confidential letter to the government that Reuters is reporting for the first time Reuters. Its members include listed Indian majors Radico Khaitan, maker of the 8PM brand, and Allied Blenders and Distillers, maker of Officer’s Choice Reuters.
Monday’s meeting
Top Indian commerce ministry officials will on Monday hold closed-door talks with several senior executives of foreign and domestic liquor companies to discuss the issue, said the four people with direct knowledge of the meeting; the ministry did not immediately respond to a request for comment outside regular business hours on Saturday Reuters. Britain has said it is working with India on the issue, and the Scottish government has raised the treatment of bulk Scotch with New Delhi Reuters.
The dispute also has an enforcement edge: it was a federal investigation into bulk Scotch imports that first alarmed the companies, so Monday’s talks will show whether Delhi treats this as a classification problem to be fixed by clarification — or the opening of a longer fight over what its trade deal actually conceded.
