Talks on ''high import duty'' on wine needed: EU

New Delhi, Nov 21: The European Union has requested formal consultations with India, under the dispute settlement process of WTO, on the country's import regime for spirits and wines.

The European Union Trade Barriers Regulation Investigation, in its investigation, had contended that access to the potentially large Indian market for spirits and wines is ''severely restrictive'' due to a high duty burden and restrictions on retail distribution in states like Tamil Nadu.

In India, 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 177-540 per cent, depending on the import price of the products, a EU statement here said.

Another issue raised by the EU was related to ''restrictions'' on the sale of imported spirits and wines in Tamil Nadu, where only Indian-made spirits and wines can be sold through shops and other retail outlets.

Terming these ''trade barriers'' are in ''clear breach of international trade rules'', the EU has asked for WTO consultation process to arrive at a mutually satisfactory solution with India.

A request for consultations is the first stage in the WTO dispute settlement process. If the dispute cannot be satisfactorily resolved in consultations, the EU may ask for a WTO Panel to be established to rule on the legality of India's Additional Import system. WTO consultations last for 60 days.

''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 change and why we have no alternative but to pursue the matter in this way,'' European Commission spokesman for Trade Peter Power said.

According to industry estimates, the Indian market for spirits is one of the largest in the world amounting to 87 million nine-litre cases. The corresponding figure for wine is 6,67,000 nine-litre cases. Moreover, the Indian market holds particular potential for the future.

EU spirits exports to India in 2004 amounted to 23.3 million euros while the figures for wine exports were over four million euros.

UNI