"We hope very much that the discussions under process will go on and that solutions can be found without having to approach the WTO," she said according to PTI and a report by Business Standard earlier this week. Till recently the European Union (EU) had taken a tough stance by warning India that it would approach WTO if taxes on wines and spirits imported from Europe are not slashed according to the agreed levels.
Although EU takes action on behalf of the block of its 27 member nation members, countries like France play an important role in the wine and spirit issues. "We are sure that arrangements can be found between Indian producers and Europeans, especially French producers," she said, indicating a softer stance.
The European Commission had earlier taken India to WTO in 2007 seeking redressal of its grievances which included the denial of 'national treatment' to wine and liquor imported from Europe. This had resulted in the government finally eliminating the Additional Customs Duties in July 2007.
Under the national treatment rules, the imported products must be treated at par with domestic products. The WTO consultation process on the issue was suspended following the corrective actions by New Delhi. However, Maharashtra had increased the special excise duties to 200% immediately, and Delhi followed earlier this year, besides Karnataka. Maharashtra finally relented a few months ago while Delhi continues to defy, for the time being. Goa and Tamil Nadu are other offenders, according to EU.
If the EU ends up taking a softer stand with France actively supporting the new strategy because of its many other commercial interests in India, it may be a while before the excise duties are reduced in Delhi. Despite the drop of about 35-40% in wine sales in Delhi since the excise was increased, the revenue collection has reportedly increased due to the higher taxes more than offsetting the fall in sales. This may go against the Delhi denizens who want to enjoy a glass or two of the healthy drink with their meal in the evening. |