According to the Online Encyclopaedia:
"A miniature jug used for individual servings of alcohol, dating from British colonial India at the end of the 19th century. Chota is the Hindi word for 'small measure'."
Samosapedia, "the definitive guide to South Asian lingo", gives it slightly differently:
"A standard pitcher/tankard was marked by wooden nails called pegs or pins in 17th/18th century Great Britain and a 'peg' usually marked an individual quantity of drink. This measure was later adopted to make individual whiskey/brandy containers during the Raj that measured about 2 ounces (about 60ml). A Chota Peg was half the size, about an ounce or 30ml."
Hence by derivation chota peg became British Army slang for an alcoholic drink, especially whiskey or brandy and soda, or gin and tonic.