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India, EU may resolve dispute over duties on wine, spirits

04 Nov 2009

India and EU are meeting on November 6 for discussing issues related to trade and investment. The high import duties on wine and spirits in India will dominate the talks though India is ready to face any action by the WTO if the issue is taken to the world body.

Maharashtra is the only state that has not complied with the union government’s advice to lower levies on imported wines and spitits. The issue has already been sorted out with the Goa and Tamil Nadu governments, which have agreed to give ‘national treatment’ to the imported liquor, which stipulates that they be treated on par as domestic items. Goa, Maharashtra and Tamil Nadu are among the biggest markets for imported wines and spirits.

Commerce minister Anand Sharma has written to the Maharashtra government asking it to fall in line. EU knows very well that nothing can be done beyond this as it is a state subject. “However, if it still takes us to the WTO, we are ready,” says a senior official of the commerce ministry.

The process of dragging a member country to WTO incurs a heavy expense on the complainant and takes anywhere between two and four years. On a recent visit to India, French foreign trade minister Anne Marie Idrac had said the issue would be sorted out amicably soon without having to move the WTO. EU had earlier dragged India to the WTO dispute settlement body in 2007, which resulted in India slashing of additional customs duty charged on imported spirits.

The duty was as high as 550% of the value of certain categories of spirits and up to 264% for wines. The highest rate was brought down to 150% though the union government hiked the basic customs duty to 150% from 100%. Some states like Maharashtra, Goa and Tamil Nadu also increased the excise duty on imported liquor by as much as 200-250%.

The issue is likely to be discussed in the coming India-EU Summit to create a trade and investment agreement which was initiated in June 2007, covering trade in goods, services, investment, intellectual property rights, competition policy and geographical indications, among others.

— ImagesFood.com Bureau