India has removed the additional customs duty on imported liquor, wine and beer, according to a statement from the finance ministry. The move follows complaints by the European Union and the United States in the World Trade Organisation (see earlier report ‘WTO dispute panel to hear EU complaint on Indian liquor tariffs’).

The additional customs duty ranges between 20% and 150%. This is over and above the basic customs duty of 150% allowed by the WTO. The multiple duties took the overall tax up to 550% on imported spirits, and 264% on wine.

The government has, however, raised the basic customs duty on wine from 100% to 150%, as permitted by the WTO, according to some reports. The central government may also allow states to levy duties to recoup the revenue losses.

The influential Scotch Whisky Association (SWA) has welcomed the news. It has been campaigning for six years for a reduction in India’s high import duties.

The duties were seen as a major hurdle by Scotch whisky exporters who were keen to enter the vast Indian market for spirits and wine.

The Scotch industry sees India and China as major markets. China has reduced import tax from 65% to 10%. But India is seen as the more lucrative market. According to industry estimates, after the withdrawal of duties, exports to India are expected to jump from 750,000 cases to 20 million cases.

July 4, 2007