India cuts duty on imported wines

Published: 23 July, 2008

India withdrew the additional customs duty on imported wines and spirits on Tuesday in an effort to resolve a dispute with the European Union and other leading trading partners over high duties on these items.

But the government raised the basic customs duty on wines from 100% to 150%, as permitted by the World Trade Organisation, a rate which will continue to apply to spirits and liquors.

A European Union Commission report issued last year found "clear violations of WTO provisions". Scotch whisky makers had asked the Commission to escalate the dispute after India left wine and spirit duties untouched in its annual budget in February, despite lowering duties on other imports.

EU spirits exports to India in 2005 amounted to 43 million ($US56.4 million, 29,01m), while wine exports stood at just 7m euros, according to a study by the Centre for European Policy Studies.

Demand for imported wines and spirits is rising in India as a fast-growing economy and higher wages boost the spending power of an expanding middle class.

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