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The United States said
on Friday it would ask WTO to investigate whether India's
import duties on US wines violate global commerce rules.
The announcement comes a month after
the WTO established a panel to examine an EU complaint
against wine and liquor restrictions in a number of
Indian states.
"India is an important export
market for US products and the United States and India
have successfully worked on a number of important trade
issues. However, we believe the layers of customs duties
India applies to US products, in particular to wine
and distilled spirits, are not in line with its WTO
commitments," said US Trade Representative Susan
Schwab in a statement
"We are disappointed that WTO
consultations failed to resolve our concern with the
duties and that we must resort to a WTO panel. The United
States will continue to work toward a resolution of
this issue with India but we must ensure a level playing
field for US products around the world," He added.
India's basic import duties on wine
are 100 per cent, while liquor attracts a duty of 150
per cent, both within the norms set by WTO. However,
a special duty, CVD (Counter Vailing Duty) charged additionally
on the landed import price takes the total applicable
duty to 180-267% for wine (depending on the wine price
levels) and 553% for liquor. Tamil Nadu does not even
allow foreign wine to be sold through shops.
India is one of the largest markets
for wine and liquor in the world and has huge potential
for growth. It consumes about 7 million litres of wine
with an annual growth of over 30%.
The growth in proper market conditions
can be gauged from wine sales in the special duty-free
shops at airports and luxury hotels. They grew by 350%
between 2000 and 2005.
Mr. Kamal Nath, the Indian Commerce and Industries minister,
a wine connoisseur himself, did acknowledge in March
that tariffs were high, adding that his government remained
committed to resolving the problem by negotiations.
He had also hinted that reduction of duties will be
made soon through the special duty cut through a legislation
in parliament.
A senior commerce ministry official said, "It will
take at least six months for the WTO hearings to be
completed and we hope to have the necessary legislation
in place to bring down duties on wine and spirits much
earlier than that."
Senior officials said the US move to
intensify the dispute was a pressure tactic to urge
India to take an immediate action.
The Indian government is likely to
move a bill in Parliament to lower customs duty on imported
wines and spirits. This will also pave the way for cheaper
retail prices in the domestic market.
The finance ministry is expected to
draw up a proposal, which will soon be taken to the
cabinet for approval.
The Parliament session was over last
week without any discussion on the issue. Meanwhile,
the Indian wine prices have hardened in the recent past
suggesting that the Indian producers feel that the duty
reduction issue has been postponed for a while, at least.
Subhash Arora
May 26, 2007
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