The Hindu Business Line : Spirit imports: EU favours WTO talks

Heavy duty
Decision follows an investigation carried out by European Union's Trade Barriers Regulation.
Access to large market for spirits and wines is severely restricted due to a high duty burden.

New Delhi , Nov. 20

The European Commission said on Monday that it will request formal consultations with India in the WTO (under the Dispute Settlement Understating) regarding the country's import regime for spirits and wines.

This decision follows an investigation carried out in the framework of the European Union's Trade Barriers Regulation (TBR) at the request of the European Spirits Organisation (CEPS) and the Comité Européen des Entreprises Vins (CEEV), a press release issued by the European Commission said.

A European Union TBR investigation concluded that access to the potentially large Indian market for spirits and wines is severely restricted due to a high duty burden and restrictions on retail distribution in certain Indian States. "The European Union considers that these trade barriers are in clear breach of international trade rules. After having allowed India a considerable period of time to address the problem, the EU now hopes to use the WTO consultation process to arrive at a mutually satisfactory solution with India," the Commission said.

The European Commission spokesman for Trade, Mr Peter Power, said, "We will always respect genuine sensitivities in India's development but this is out and out protectionism, which even the Indian Government has not been able to justify in the past. That is why there must be a change and why we have no alternative but to pursue the matter in this way."

EU spirits and wine producers have for a number of years raised concerns about the excessive duty burden on imports of spirits and wines into India.

Additional Duties

The key issue at stake is high Additional Duties levied on imported spirits and wines. The Additional Duties are levied on top of high federal basic customs duties (of 150 per cent for spirits and 100 per cent for wines), raising the cumulative federal duty burden to between 177 per cent and 540 per cent (depending on the import price of the products).

Another issue relates to restrictions on the sale of imported spirits and wines in Tamil Nadu, where only Indian-made spirits and wines may be sold through shops and other retail outlets.

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