India probing Pernod, Diageo Scotch imports under India-UK trade pact, sources say

India’s tax authorities are investigating whether Pernod Ricard and Diageo, via their local units, misclassified some bulk Scotch imports to qualify for lower tariffs under the India-UK trade pact. Five industry sources told Reuters that the probe centers on whether duty relief introduced under the pact was incorrectly applied. The investigation follows unexpected visits by tax inspectors to Pernod’s headquarters near New Delhi and searches at Diageo’s Indian unit, United Spirits. Under the pact effective July 15, India agreed to cut import taxes on certain Scotch imports to 75% from 150%. Sources said officials believe bulk concentrates were wrongly classified. Both companies say they are cooperating and have complied with local laws.