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EU drops WTO probe into Indian import duties

Published:  23 July, 2008

The European Union has dropped a World Trade Organisation investigation into Indian import duties.

Basic tax hike

At the same time it took away additional customs duty on wine and spirits entering the country, the Indian Government hiked its basic import tax to 150% from 100%.

The EU said "it regrets" that decision, which is possible because of the large difference between India's maximum notified tariffs in Geneva and the duties it actually applies to exporters."

A EU spokesman said the litigation against India would remain on hold for a year. "We will continue to monitor the situation on the ground to make sure that no new discriminations appear."

As a result of the tariffs, India buys less than 1% of its spirits from foreign suppliers and imports about 15%.

The decision to abolish the duties may spark an increase in foreign liquor shipments.

The EU complaint followed five years of unsuccessful diplomatic efforts to resolve the dispute as well as a 10-month probe that the bloc said was marked by an "unprecedented" lack of cooperation by India.