The Hindu Business Line : United Spirits may review stand on excise barriers for foreign brands

Bangalore, Jan. 5 A financial tie-up with global majors such as Diageo could see United Spirits re-looking at its stiff stand on excise barriers for foreign spirits brands as well as the definition of whisky.

Sources close to United Spirits told Business Line that though United Spirits is proceeding slowly on a possible financial tie-up with Diageo, it has started an internal debate on the stand it should take regarding sensitive issues such as higher duties for foreign liquor brands.

A company official said that with the Government keen on liberalising the sector more, issues such as these would resolve by itself though United Spirits continues to postpone its decision to apply for a membership with the Scotch Whisky Association based out of Scotland.

United Spirits owns the Scottish liquor company Whyte & Mackay.

Sources also said that even Diageo is keen on getting some clarity on the stand United Spirits plans to take regarding excise barriers.

United Spirits has already said that its talks with Diageo regarding a deal have “gone the farthest”.

Tax level

The liquor lobby in India has always maintained that the domestic industry can have a level playing field only if the taxes on imported liquor are higher. United Spirits’ Chairman, Mr Vijay Mallya, has repeatedly said that the European manufacturers’ opposition to whisky made from ingredients other than cereals was unfair.

Most Indian liquor manufacturers make whisky from sugarcane molasses and the Scotch Whisky Association, a powerful industry lobby, refuses to recognise such whisky brands.

An SWA spokesperson, Mr David Williamson, in an e-mail to Business Line confirmed that United Spirits was yet to apply for a membership with the association. He pointed out that the recent bilateral discussions between the European Union and India over trading relationships are understood to have been positive.

Scotch sales

He said that the EU-India Free Trade Agreement discussions put in place a new framework that allows both Indian and European businesses to realise the mutual benefits of an increasingly important trading relationship.

“A key priority for the EU is that there are improvements in the opportunity for EU wines and spirits to be traded in India, including tariff liberalisation, and that is a position strongly supported by Scotch whisky distillers,” he said.