NEW DELHI: The government is hopeful of resolving the dispute over bulk Scotch whisky shipments held at Indian ports within the next few days, commerce secretary Rajesh Agrawal said on Friday.Agrawal said product classification was among the key concerns being discussed and that the Department of Revenue was working to address the issue.“Department of Revenue is working to resolve it. Classification is among the key issues. It should be resolved very soon…We are very hopeful that it would be resolved in some days,” Agrawal said, ANI reported.His remarks came after officials from the commerce and finance ministries met to discuss concerns raised by liquor companies over the classification of imported Scotch whisky.Representatives of the International Spirits and Wine Association of India (ISWAI) and the Confederation of Indian Alcoholic Beverage Companies (CIABC) also met Agrawal to flag the differences over customs duties.The dispute centres on whether bulk Scotch whisky imports qualify for the reduced 75% duty under the India-UK trade agreement, which came into effect in July, or should attract the 150% duty applicable to certain alcoholic preparations.Customs investigators argue that the 75% tariff concession under the trade pact applies only to finished products, such as bottled Scotch whisky, and not to bulk concentrates that undergo further processing.The Directorate of Revenue Intelligence (DRI) has classified the imported goods as “compound alcoholic preparations”, rather than finished whisky. This has led to a disagreement over the applicable Harmonised System (HS) code and the duty payable.Earlier a confidential November 4 memo from the DRI, reviewed by Reuters, directed customs commissioners across the country to continue applying the higher duty.It said importers were “incorrectly” claiming benefits under the India-UK trade pact for bulk Scotch shipments. The memo warned that any misclassification had “large-scale, recurring substantial revenue implications”.“Preliminary investigation revealed that the imported goods are not finished whisky/brand/rum as such, but are concentrated/compound preparations which are subjected to further manufacturing,” the memo said.The dispute has led to shipments belonging to several liquor companies being held at Indian ports.Companies affected include Pernod Ricard India, Diageo, Radico Khaitan and Allied Blenders and Distillers, according to people familiar with the matter.Pernod Ricard and Diageo each have more than 40 containers held at ports, while Bacardi has another five containers on hold, industry sources told Reuters.The delays could disrupt supplies, the sources said. Tax officials have also searched the offices of several companies, including Pernod Ricard and Diageo, and questioned executives in recent weeks.Around 80% of Scotch whisky imports from Britain by volume arrive in bulk and are subsequently used to manufacture Indian-Made Foreign Liquor (IMFL), which blends smaller quantities of Scotch with other spirits and ingredients.Scotch whisky exports to India were worth $335 million in 2024. The Scotch Whisky Association has estimated that the India-UK trade agreement could increase the value of this trade by $1.34 billion over five years.The International Spirits and Wines Association of India has cautioned that the dispute “risks undermining, in practice, an important market-access benefit negotiated and agreed between India and the United Kingdom”.
