The Hindu Business Line : Flat rate additional duty for liquor imports sought

THE Scotch Whisky Association and the global spirits companies operating in India have approached the Centre for a flat rate additional duty of $30 (approximately Rs 1,366) per case on imported liquor, if the Government decides to keep the additional duty regime in the next financial year.

This comes in the wake of the UK Trade Minister, Mr O'Brien's visit to the country, accompanied by the representatives of the SWA, this week.

The issue of better market access for Scotch whisky in the country is prominently on the agenda of the UK delegation, which is already in New Delhi and has completed one round of talk with the Ministry of Commerce. It must be mentioned that India is bound to slash the basic import duty of imported spirits to 150 per cent by April this year in line with the WTO condition.

"Ideally, we would like to see additional duties to go and the market open up with basic duty alone. However, if the Centre continue with additional duties, we have suggested a flat rate of $30 per case (of nine litres) irrespective of the import price points," sources close to SWA said.

At present, India levies a basic duty of 166 per cent apart from a four-tier ad-valorem additional duty structure. Imports priced below $10 per case carries an additional duty of 150 per cent, while those priced between $10 and $20 will attract 100 per cent.

The additional duty for products priced between $20 and $40 is pegged at 50 per cent, and finally, for imports priced above $40, it is 25 per cent. The cumulative federal tax incidence on imports is pegged between 249 to 590 per cent as the country follows the dictum "cheaper the imports higher the duty".

However, informed sources in the domestic spirits companies said they would oppose any move for a flat rate additional duty, which is widely perceived as a counterveiling duty to insulate the local industry from the floodgate of cheap imports. "Our initial reaction is that we would oppose flat rate additional duty on the ground that Indian companies are subject to varying excise duties from State to State," sources who are part of the domestic spirits lobby said.

Interestingly, one of SWA's major grouse remains that India holds out different fiscal treatment for locally made and imports spirits, which is an outright violations of WTO norms.

SWA and the multinational lobby argue that there is no reason for continuing with additional duties, as the import threat to the local industry is non-existent. "The official figure indicate that the volume of imported spirits have registered a declining trend," they said.

"A flat rate of $30 per case is good enough to protect the local industry as the cheapest import would cost anywhere between Rs 600 to Rs 700 (per quart). Almost 90 per cent of the locally made spirits (Indian Made Foreign Liquor) sells below the price point of Rs 225," the sources added.

The flat rate additional duty would also make the retail price of topline scotch brands such as Johnnie Walker and Chivas Regal more affordable at around Rs 2,400 per quart in Mumbai as against prevailing cost of Rs 3,500.

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