Tax regime on wine and whisky imports may come under WTO scrutiny

New Delhi, Sep 22 (UNI) More than a year after a World Trade Organisation panel suspended a wine and spirit case against India, European Union has sought new WTO consultation on the same old charge of unfair and discriminatory tax regime on these products, apparantly in view of higher taxes in Goa, Maharasthra and Tamil Nadu.

A request for consultations is the first stage in the WTO dispute settlement process. If the dispute can not be satisfactorily resolved in consultations, EU may ask for a WTO panel to be established to rule on the legality of India's import regime.

WTO consultations last for 60 days.

EU today requested WTO consultations with India on its domestic tax regime for spirits and wines. It has sought clarifications from the country on the way tax legislation and other measures on market access for wine and spirits are applied in Goa, Maharashtra and Tamil Nadu.

These states are among India's largest markets for wines and spirits.

EU said custom tariff for imported bottled wines and spirits is already as high as 150 per cent, adding ''discriminatory internal taxation in some Indian states adds to burden on importers.'' The complaint said, Maharashtra government imposes a special fee on imported wines but exempts locally-produced wines and spirits from excise duty. Goa, it says, adds an import and 'label-recording' fee to the cost of imported wines and spirits.

EU claimed that internal taxes in both the states are applied only to imported wines and spirits, or at a much higher rate for imports than domestic goods. This, it said, is a breach of the WTO's national treatment principle, which requires that WTO members treat imports and domestic goods the same.

In respect of Tamil Nadu, the complaint said despite recent amendments to legislation, there are no clear indications that the restrictive retail and wholesale practices in Tamil Nadu have ceased. A special fee also appears to be being imposed on imported wines and spirits only, the complaint alleged.

In July 2007,the World Trade Organisation had rejected a US complaint, while Brussels had dropped its complaint that Indian import duties unfairly discriminated against wine and spirits from United States and EU.

A WTO investigative panel had then ruled that India did not act inconsistently with its WTO obligations.

India's basic import duties on wine are 100 per cent, while tariff on spirits is 150 per cent, both within WTO limits.

According to EU industry, 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.

In 2007, EU exports of spirits to India amounted to about Euro 57 million out of a total Euro 7 billion exported to more than 150 countries. EU exports of wine to India amounted to about Euro 11 million out of a total Euro 6 billion in the same year.

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