Scotland's Swinney raised Scotch whisky tariff concerns during India trip

By Alistair Smout

LONDON, Oct 30 (Reuters) - Scotland's leader John Swinney raised the treatment of bulk Scotch whisky exports with the Indian government during a visit that ended this week, the Scottish government said on Friday, after Reuters reported on India's move to exclude them from lower tariffs.

Whisky tariffs were a sticking point during years of protracted negotiations on a UK-India free trade deal, though India ultimately agreed to halve import taxes on certain Scotch imports to 75% from 150% immediately and to 40% over 10 years as part of the historic agreement, which was implemented in July.

Indian investigators, however, have privately told companies including Pernod Ricard PERP.PA and Diageo DGE.L the reduced rate does not apply to bulk Scotch concentrates, creating the first significant dispute over the free-trade agreement since it took effect.

Scottish First Minister Swinney visited India between October 20-27, and a government spokesperson said he "promoted Scotland's economic interests with Indian Ministers and investors, including discussing the opportunities presented by the UK-India free-trade agreement" on the trip.

"Discussions also covered the implementation of the agreement, including the treatment of bulk Scotch whisky," the Scottish government spokesperson said by email, in response to a Reuters inquiry.

"We will continue to work constructively to ensure Scottish exporters can make the most of the agreement."

Indian tax officials are investigating whether Pernod Ricard and Diageo wrongly classified some bulk Scotch whisky imports, allowing them to pay lower tariffs. A group representing liquor makers argues that India's move goes against the provisions of the India-UK trade deal.

While responsibility for trade policy lies with the British government rather than the devolved Scottish administration, Swinney has a role in promoting the commercial interests of Scottish businesses abroad.

The British government has said it is working with the Indian government in a bid to resolve the issue.