The Hindu Business Line : EU favours talks with India on tax regime for wines & spirits

The European Union on Monday said that it would request WTO-consultations with India on its domestic tax regime for spirits and wines, though a formal panel set up by the WTO on this issue was suspended in 2007, following changes in some elements of tax law New Delhi made.

A communiqué issued in Brussels said the proposed consultations, however, seek clarifications from India on the way tax legislation and other measures on market access for wine and spirits are applied in States such as Goa, Maharashtra and Tamil Nadu.

The EU said that both Maharashtra and Goa impose a special fee on imported wines, but exempts locally produced wines and spirits from excise duty.

Goa adds an import and ‘label-recording’ fee to the cost of imported wines and spirits. While the custom tariff for imported bottled wines and sprits at the Indian border is already as high as 150 per cent, discriminatory internal taxation in some Indian States adds further to this burden on importers, the EU said.

Similarly in the case of Tamil Nadu, despite recent legislative amendments, there are no clear signs that the restrictive retail and wholesale practices in that State have ceased. A special fee is also being slapped on imported wines and spirits.

When contacted, the Commerce Secretary, Mr Gopal K. Pillai, said that consultations are a routine feature before the talks fail, following which a request for a panel to the WTO to resolve the dispute is made by the affected party. If the consultations fail to reach a satisfactory solution within two months after the receipt of the plea for consultations, the complaining party might request the establishment of a panel, an official said.

The EU said that as part of its 2007 market access strategy the European Commission has focused new resources on removing unfair barriers to trade in growing markets such as India.

The Indian market for spirits is one of the largest in the world, amounting in 2007 to about 130 million nine-litre cases. The corresponding figure for wine is 1.5 million nine-litre cases.

Last year, EU exports of spirits to India were about €57 million, out of a total €7 billion exported to more than 150 countries. EU exports of wine to India were about €11 million out of a total €6 billion in 2007.

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