Liquor giant Pernod Ricard facing tax evasion probe in India
What's the story
India's customs authorities are investigating French liquor giant Pernod Ricard over alleged tax evasion. The company is accused of undervaluing its Scotch whisky imports by nearly 67.5%. This is said to have helped it evade the country's 150% tariff on imported Scotch concentrates. The concentrates are blended locally to create popular whisky brands like Royal Stag.
Investigation
Allegations of concealment and internal codenames
The investigation alleges that Pernod Ricard has been concealing the age and composition of its imported Scotch whisky concentrates. This, they say, was done with an intention to hide their true value and pay lower tariffs. The company is also accused of introducing internal codenames for these imports in 2011, making it harder for customs officials to compare them with rival imports.
Company stance
Pernod Ricard's tax liability at $314M
In response to the allegations, Pernod Ricard has denied any wrongdoing. The company maintains that it has been fully compliant with Indian laws and is addressing this matter via the appropriate legal channels and remains confident in its position. Court documents show that Pernod's current tax liability stands at nearly $314 million. If fines are imposed under Indian law, the total payout may exceed $600 million if the company loses the case.
Market impact
Ongoing expansion amidst legal challenges
Despite the tax dispute, Pernod Ricard continues to expand its operations in India. The country is its biggest market by volume, accounting for 10% of the company's global sales. In 2024, it announced plans to set up its largest malt distillery in Asia in Maharashtra.