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A WTO investigative panel has apparently ruled this week
that India had not acted inconsistently with its WTO obligations, trade
officials said. A report in Economic Times claims they spoke on condition
of anonymity because the decision has not been made public yet.
But the decision may not mean any loss to the US as the
government had already removed ACD (Additional Customs Duty) last July
due the pressure from the US and the 27-nation EU, although during the
process the customs duty was increased to 150% from 100%.
EU had withdrawn its case a few days after this announcement,
after keeping it under suspension for a few days. USA had continued on
with the case.
Maharashtra had increased the excise duty from the existing Rs.150 a
bottle to a massive 150% which was increased to 200% a couple of months
ago. Ironically, this duty was decreased from 150% to 75% keeping most
people gaping with surprise.
The US had not taken this factor into consideration while continuing
with the case. The government had continued to charge additional 4% import
duty but allowed the refund after payment first, presumably to stay within
the limits of WTO.
The central government has expressed its inability to interfere in the
State excise duties and their sales policies. Under the Indian Constitution,
states are encouraged to prohibit consumption of alcohol and are allowed
freedom to set their own policies and excise duties.
The increase in duties in Maharashtra has practically dried up the consumption
of premium wines even in the 5-star restaurants where the import duty
is nil but the excise duties of 200% have made them unaffordable for most
of their clients.
Other states have not deviated much from their earlier excise duties,
by and large.
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