India's Scotch probe of Diageo, Pernod undermines trade pact benefits

Diageo: Diageo is a leading global producer of alcoholic beverages with a strong portfolio in Scotch whisky and other spirits. The company maintains significant operations in India through its subsidiary United Spirits, focusing on both imported and locally blended products. Its Scotch imports are currently subject to scrutiny by Indian tax authorities over classification under the India-UK trade agreement. Pernod: Pernod Ricard is a major international spirits company known for its range of whisky and other premium alcoholic drinks. It imports bulk Scotch concentrates into India for blending into local brands and has faced recent regulatory inquiries regarding tariff classifications. The firm is cooperating with Indian authorities investigating compliance with reduced duties under the bilateral trade pact. Trade Agreement: The India-UK free trade agreement took effect in July and provides for lower import tariffs on qualifying Scotch whisky shipments from the UK. Industry Response: A trade group representing the companies has stated that excluding certain bulk imports from tariff benefits risks undermining key provisions negotiated in the India-UK pact. Regulatory Action: Indian tax officials have conducted searches and questioned executives at the companies' Indian offices as part of an investigation into import classifications for bulk Scotch.