India Accuses Pernod Ricard of Misrepresenting Whisky Value to Pay Lower Tariffs

Indian National flag waves Dec. 15, 2021, during Jashn-e-Chillai Kalan Program at Shopian, Jammu and Kashmir, India. (Photo: Nasir Kachroo/NurPhoto via AP)

Pernod Ricard is facing a major legal battle in India after investigators accused the company of concealing the age and composition of imported Scotch whisky concentrates in order to lower customs duties, Reuters reported.

According to Reuters, Indian authorities concluded that Pernod India undervalued imported Scotch concentrates by 67.49%, resulting in a tax demand now totaling nearly 30 billion rupees, or about $314 million. With penalties, the total exposure could exceed $600 million if the company loses the case, per Reuters.

The dispute centers on Scotch whisky concentrates imported from Chivas Brothers in the UK and later used in Indian whisky brands including Royal Stag.

Investigators allege Pernod intentionally obscured the true nature of the imports by withholding details about the products’ exact composition and age. Authorities also claim the company introduced internal “codename” systems for certain Scotch concentrates, including labels such as “RFM” (Rich Fruity Malt) and “HMW” (Heavy Malt Whisky), making it harder for customs officials to compare Pernod’s imports against competing products.

In government filings cited by Reuters, investigators said Pernod did not declare “the true description” of imported malts and alleged the company complicated disclosures “to avoid comparison with similar goods imported.”

India historically imposed tariffs of up to 150% on imported Scotch whisky concentrates, though the country recently agreed in principle to gradually reduce those duties as part of a broader trade agreement with the United Kingdom.

In a statement cited by Reuters, Pernod India said it “rejects any suggestion of wrongdoing,” adding that it has been fully compliant with regulations and is pursuing the matter through legal channels.

The company also argued that investigators selectively compared Pernod’s imports with higher-priced shipments from Allied Blenders and Distillers while excluding dozens of other importers that brought Scotch concentrates into India at lower prices.

According to court filings cited by Reuters, Pernod further claims it was denied access to key pricing data used during the investigation, calling the findings “grossly violative of the doctrine of natural justice.”

The case represents one of the largest recent tax disputes involving a global spirits company operating in India, which is Pernod Ricard’s largest market by volume and accounts for roughly 10% of the company’s worldwide sales.

The battle also adds to growing regulatory scrutiny facing Pernod in India. The company is separately dealing with an anti-trust investigation tied to alleged retail practices in New Delhi, along with another case involving alleged liquor policy violations. Pernod has denied those allegations as well.

Despite the ongoing disputes, Pernod Ricard has continued expanding its Indian operations. In 2024, the company announced plans to build what it described as Asia’s largest malt distillery in Maharashtra state.