Pernod Ricard could face a payout of more than US$600 million in India after withdrawing a court challenge against a US$314 million back-tax demand, marking a major financial risk for the French spirits group in one of its most important markets.
The potential payout would be equivalent to more than a third of Pernod Ricard’s €1.63 billion (about US$1.77 billion) net profit in its 2025 financial year, underscoring the scale of the dispute for the maker of Chivas Regal, Ballantine’s and Absolut.
The company has not abandoned its challenge to the tax demand. Instead, it withdrew its case from the Delhi High Court to pursue an appeal through India’s tax authorities. The court dismissed the case as withdrawn after the government raised no objection.
If Pernod Ricard loses the appeal and penalties are added, its total liability could exceed $600 million, about one-fifth of the $2.9 billion in revenue generated by its Indian business last year and three times its profit in the country, according to Reuters.
The withdrawal does not amount to an admission of liability. Pernod Ricard has rejected allegations of wrongdoing and said it remains confident in its position.
Dispute centres on imported Scotch
The four-year investigation centres on how Pernod Ricard declared the value of Scotch whisky imported into India.
Indian authorities allege that the company withheld information about the composition and age of its whisky blends, allowing it to undervalue imports and reduce the customs duties it owed. Imported Scotch was subject to tariffs of as much as 150% during the period covered by the investigation.
Investigators also alleged that Pernod Ricard deliberately complicated its disclosures by using internal codes for different malt components, making it more difficult for customs officials to assess the contents and value of the imported whisky.
Pernod Ricard initially asked the Delhi High Court to quash the US$314 million demand. The company argued that authorities had failed to provide investigation materials that could have helped it prepare its defence.
Nine months after filing the court challenge, Pernod Ricard withdrew the case to pursue what the court described as the “statutory alternative remedy of appeal.” The appeal is expected to be heard by a commissioner within the tax authority.
India grows in importance
The dispute comes as India becomes increasingly important to Pernod Ricard’s global business.
India is the company’s largest market by volume and accounted for about 13% of group net sales in the first half of its 2026 financial year. Sales in the country rose 4% organically during the period, even as Pernod Ricard suffered sharp declines in the United States and China.
India is the company’s largest market by volume and accounted for about 13% of group net sales in the first half of its 2026 financial year. Sales in the country rose 4% organically during the period, even as Pernod Ricard suffered sharp declines in the United States and China.
Excluding Imperial Blue, the Indian whisky business Pernod Ricard agreed to sell, organic sales in India increased 8%.
International brands including Jameson, Ballantine’s and Absolut recorded double-digit growth, while Indian whisky brands Royal Stag and Blenders Pride posted mid-single-digit gains. The company has continued to point to premiumisation and strong underlying consumer demand as drivers of long-term growth.
Pernod Ricard’s dependence on India, however, also increases its exposure to the country’s legal and regulatory risks.
The tax dispute comes as the company faces a separate antitrust investigation and an ongoing ban on selling its brands in New Delhi.
In May, the Delhi High Court rejected Pernod Ricard’s attempt to resume sales in the capital, backing city authorities that had refused to renew its liquor licence because of its alleged involvement in a liquor-policy investigation.
Pernod Ricard has denied those allegations and argued that it has not been convicted of any offence. Its products have been excluded from New Delhi since 2023.
The city previously accounted for about 5% of Pernod Ricard’s Indian sales. Although relatively small in revenue terms, New Delhi is an influential market for premium international spirits and an important showcase for global brands.
A lucrative but complicated market
India is one of the world’s fastest-growing spirits markets, supported by its large population, rising incomes and growing demand for premium whisky. But it is also one of the most difficult markets for international drinks companies to navigate.
Alcoholic drinks for human consumption are excluded from India’s national Goods and Services Tax system. Instead, individual states control alcohol taxation, pricing, distribution and licensing.
That means India does not operate as a unified alcohol market. Producers must navigate different excise duties, brand-registration rules, pricing controls, distribution structures and retail licensing systems in each state. Policies can also change from year to year.
The central government separately controls customs duties on imported alcohol. International drinks companies can therefore face national tariffs at the border, followed by state excise duties and other charges before their products reach consumers.
The 150% tariff at the centre of Pernod Ricard’s dispute made customs valuation especially consequential. Even a relatively small difference in the declared value of an imported whisky could create a substantial change in the duty owed when applied across years of shipments.
The India-European Union free trade agreement is expected to reduce some of those barriers after it is signed, ratified and brought into force. Under the agreement, India will initially cut tariffs on EU spirits from as much as 150% to 75%, before gradually reducing them to 40%.
The reductions could benefit EU-made Pernod Ricard products, including Jameson Irish whiskey, Absolut vodka and Martell cognac. They would not cover the Scotch whisky brands at the centre of the tax dispute, including Chivas Regal and Ballantine’s.
The agreement would also leave India’s state excise duties, licensing requirements and distribution controls in place, meaning much of the country’s regulatory complexity would remain.
Growing pressure on Pernod Ricard
The dispute comes at a difficult time for Pernod Ricard globally.
In the first half of its 2026 financial year, reported sales fell 14.9%, while net profit declined 18% to €975 million. The company was hit by weaker demand in the United States and China, unfavourable currency movements and higher tariff costs.
Net debt stood at €11.17 billion at the end of December 2025.
India remains one of the company’s clearest sources of growth. But the possibility of a payout exceeding $600 million highlights the risks attached to operating in a market where customs rules, state taxes, licensing regimes and regulatory investigations can have far-reaching financial consequences.
Pernod Ricard may still succeed in reducing or overturning the tax demand. No final liability has been established, and the appeal could take years to resolve.
But the stakes are now clear: The company faces a potential bill equal to three years of profit from its Indian business in the market on which it is increasingly relying for global growth.
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