New Delhi, 2 November 2026 : The Ministry of Commerce and Industry on Monday gave a significant assurance to the Indian alcobev industry that the ambiguity surrounding the HSN code classification for bulk Scotch whisky imports will be resolved amicably and soon. A joint meeting of alcobev industry associations with Commerce Secretary Rajesh Agrawal and his team concluded on a positive note, offering much-needed relief to a sector that has been caught in the middle of India’s first major trade dispute under the India-UK Free Trade Agreement.
Commerce Secretary tells industry associations: FTA commitments will be honoured; will work with Finance Ministry to ensure business continuity
The dispute stems from the India-UK FTA, which came into force on July 15, 2026, reducing import duties on Scotch whisky from 150 per cent to 75 per cent, with a further reduction to 40 per cent phased over ten years. However, Indian customs authorities subsequently took the position that the reduced tariff applies only to bottled Scotch whisky imported from the UK, while bulk Scotch imported as a concentrate and blended and bottled domestically would continue to attract the old 150 per cent duty under a separate HSN classification for compound alcoholic preparations.
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Diageo Expands Whisky Strategy Beyond Premiumisation, Targets Value and Social Drinking SegmentsThe ruling sent a chill through the industry. Bulk imports account for nearly 80 per cent of all Scotch whisky coming into India and are a key ingredient in some of the country’s best-selling IMFL brands. Companies like Diageo and Pernod Ricard, whose Indian blended brands such as Royal Stag, Blenders Pride and McDowell’s rely on imported bulk Scotch, faced a sharp rise in input costs. India’s Directorate of Revenue Intelligence had also reportedly visited the offices of major spirits companies in connection with the classification issue.
At Monday’s meeting, the Commerce Ministry made its intent clear it will honour its commitments made under the India-UK FTA and will work with the Ministry of Finance to find a resolution within the framework of the law. The Ministry also underlined that a key objective of every FTA entered into by the Government of India is to ensure that the domestic industry benefits from it, signalling that any resolution will be balanced.
Welcoming the outcome, CIABC Director General Anant S Iyer said, “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. We look forward to an early resolution that ensures business continuity.”
The outcome of the Commerce-Finance Ministry deliberations will also set an important precedent for how similar bulk spirits provisions are handled under the India-EU FTA, where the same classification question is expected to arise.
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