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Delhi Wine Club

Posted: Saturday, July 18 2009. 13:27

EU to Hold Talks with Indian Government

The European Union has decided to hold consultations in India in September as a part of its continuing efforts to bring down effective duties on imported wine, which currently attracts around 420% in Maharashtra and goes up to even 800% in some States.

"In September, EU trade Commissioner will visit India to hold a discussion with Anand Sharma, Minister of Commerce & Industry, Government of India, to resolve the issue of discriminatory duties imposed on imported wines and spirits," Ms. Daniele Smadja, Ambassador, Head of the Delegation of  European Union, reportedly said Friday.

"The choice of the venue, Delhi instead of Geneva, is the sign of EU's willingness to solve this long dispute and to allow India to bring all the relevant experts for constructive discussions," Smadja added.

The custom tariff for imported bottled wines and spirits into India is 150%; beer attracts 100% import duty. This is within the agreement norms with WTO. However, the discriminatory excise duties and other local state taxes add further to these taxes making imported wines unaffordable for most.

For example, Maharashtra imposes a special fee of 200% on imported wines and exempts locally-produced wines and spirits from excise duty. Goa adds a higher label-registration fee for imported wines and spirits. In Delhi, the excise duty is charged at varying rates of 30-20% on the Maximum Retail Price, working out to 150-200% of the imported wine price without duties. In all these cases the internal taxes are applied to imported wines and spirits, at a higher rate for imports than domestic wines. This is a breach of the WTO's national treatment principle, which requires that WTO members give equal treatment to imported and domestic products.

The other states also continue to have restrictive policies. In states like Tamil Nadu, adequate amendments have been made to the legislation recently, but there are no clear indications that the restrictive retail and wholesale practices have ceased.

In July 2007, around the time when Ms. Smadja took charge, EU pressure and a WTO case had led to the elimination of the discriminatory Additional Customs Duty on wine and spirits imports. But the states were given the liberty to charge special duties.

The Indian market for spirits is one of the biggest in the world, amounting in about 140 million cases. Almost the same number of cases of beer is consumed. Another 200 million cases of country liquor and unaccounted for spirits are downed. Correspondingly, only 1.6 million cases of wine are consumed, including about 200,000 cases of imported wines.

EU exports of spirits to India reportedly amount to about €57 million out of a total 7 billion exported to more than 150 countries. EU exports of wine to India amounted to only about €11 million out of a total €6 billion exports.


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