Govt to meet liquor firms as bulk Scotch tariff row threatens UK trade pact

India's government will convene with liquor firms on Monday to discuss a brewing dispute over bulk Scotch imports, following the inclusion of domestic firms in the ongoing investigation. This development comes in the wake of Diageo and Pernod expressing concerns over the federal probe into Scotch imports, as revealed by four sources and an industry letter.

The dispute has emerged as a contentious issue under the historic India-UK trade agreement signed in July, which stipulates a reduced tariff of 75% for bulk Scotch imports, down from 150%.

The International Spirits & Wines Association of India, representing Pernod and Diageo, has privately conveyed to New Delhi that the exclusion of bulk Scotch imports from the tariff reduction could weaken the terms of the agreement. The Confederation of Indian Alcoholic Beverage Companies (CIABC), comprising major companies such as Radico Khaitan and Allied Blenders and Distillers, has now joined the protest, citing potential damage to domestic manufacturing.

According to a confidential letter to the government, leaked by Reuters, around 80% of Scotch whisky imports into India arrive in bulk form, contributing significantly to popular brand production.

With the Indian alcohol industry valuing the potential tariff cut at $65 billion, the government is set to hold closed-door meetings on Monday with senior executives from foreign and domestic liquor companies to address the issue. While Britain has indicated its willingness to collaborate with India on the matter, the Scottish government has also raised the topic with New Delhi.

However, India has yet to comment on the dispute, which traces its roots to years of negotiations on a UK-India free trade deal, during which whisky tariffs were a major point of contention. Despite these challenges, Indian whisky manufacturers have largely complied with the law, seeking intervention to ensure the success of Make in India.