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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
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