The Hindu Business Line : Mallya hits out at UK whisky body for lobbying against Indian-made liquor

Financial Daily from THE HINDU group of publications Friday, Feb 03, 2006

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Industry & Economy - Breweries

Mallya hits out at UK whisky body for lobbying against Indian-made liquor

Our Bureau

Mr Mallya said there was no reason for European manufacturers to oppose whisky made from ingredients other than cereals.

Bangalore , Feb. 2

THE UB Group Chairman, Mr Vijay Mallya, has hit out at UK-based Scotch & Whisky Association (SWA) for lobbying against import of Indian made liquor.

"They do not want to promote Indian made liquor in their country but want a share of our market," Mr Mallya told Business Line.

He said SWA refuses to acknowledge Indian whisky which is made from sugarcane molasses. In Europe, whisky is made from cereals.

He said liquor manufacturers in India would continue to lobby for higher import duty.

Mr Mallya said there was no reason for European manufacturers to oppose whisky made from ingredients other than cereals.

In another development, the IMFL (Indian made foreign liquor) lobby, in its Budget wish-list has asked the Government to retain the current level of duty on imported bottled liquor to provide a level playing field for the domestic beverage alcohol industry.

The statement pointed out that as per the import duty structure since 2003-04, the basic customs duty is 150 per cent, while additional customs duty (ACD) up to $10 is 150 per cent ad valorem; between $11 and $20, it is 100 per cent ad valorem; between $21 and $40, it is 50 per cent ad valorem or $53.2; and above $40, it is 25 per cent ad valorem or $53.2.

The statement said the domestic industry can have a level playing field only if the ACDs are levied as per the current structure.

Any reduction, particularly up to $10 and between $11 and $20 is likely to distort the price structure and will defeat the purpose that the Government has in view. With different levels of duties in different States, possibility of flow of liquor from the States which charge higher duties to States where duties are lower cannot be ruled out resulting in trafficking of imported liquor.

It said while foreign manufacturers enjoy all the advantages of economies of scale, subsidised agriculture imports and strong brand presence in the global market for many years, Indian industry is still in early stages in respect of the global picture.

The statement said in 2005-06 Budget, while the domestic industry had to contend with an educational cess of 2 per cent on all products where central excise duty was payable, the Government had exempted bottled liquor imports from such a levy.