| In a rather surprising
move the European Union has suspended its complaint against
India to WTO for its unjustifiable import tariffs on wine
and liquor. The EU has agreed that the three-member WTO
panel investigating its case against India may be suspended
for up to a year.
 In
a statement, the European Commission said that it “will
now continue to monitor the situation on the ground to make
sure that no new discriminations appear at state level”.
The Scotch Whisky Association has already
given a cautious welcome to the move by India. Though the
remaining duty levels still amount to 150%, Scotch whisky
stands to gain substantial new sales in India as a result
of the liberalisation
The change of heart follows India’s
recent decision to remove ‘Additional Customs Duty’
on imported beer, wine and spirits, which could bring the
total customs bill on alcohol as high as 550% of the cost
of the drink and wine as high as 266%.
The increase in basic duty announced by
the government on wines from 100% to the outside limit of
150% as per the agreement WTO would have to be acceptable
to EU and all the other members of the EU. Brussels did
however play the usual rhetoric, saying it regretted that
India was raising its basic duty on wines to 150 percent
from 100 percent, which is still within the country's WTO
limits.
EU appears to be thankful because there
is a lot more scope for export of beer and whisky from Europe.
Last year 132 million cases of beer were consumed in India
while the comparable figure for liquor was 120 million cases.
With a total consumption of less than a million cases of
wine, EU does not seem to be much perturbed that the premium
quality wines would become more expensive than before by
7-10% even if the states did not start charging the extra
excise duty as the central government hinted.
Under Section 47 of the Indian Constitution
State governments have the power to set duty levels and
may adjust them following the central government’s
move. The center can pass legislation through an Act of
Parliament by which the states can be restrained to keep
the highest levels of such duties on imported alcoholic
products from overseas or other states, to the same level
as the Indian made products. However, no such bill was presented
in the parliament, contrary to the governmental indications
earlier.
Maharashtra has utilised the powers given
to it under this Section and announced a special fee of
150% on the assessable value of imported wines and 200%
on foreign liquor, thus wiping out most of the benefits
allowed by the scrapping of ACD. While the honest, toiling
Indian wine producer claims he will be hurting by the government
policy, the importer is grumbling because he will not really
be able to sell more. One section that is going to thrive
now is the bootlegging.
U.S., suspecting that this type of a move
will be made by the states, is stalling and has said it
was continuing with its separate WTO probe. India's scrapping
of the additional duties was a "positive step,"
said Stephen Norton, a spokesman for the Office of the U.S.
Trade Representative. But he said Washington would continue
its case against India "until the concerns raised in
the dispute are resolved."
Also Read: http://www.wine-business-international.com
Read my Editorial in the next issue: The
Indian Wine Duties Circus
|
