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Mumbai to axe 200% tax on Scotch whisky

Published:  23 July, 2008

INDIA: Scotch whisky producers win battle to get Mumbai, to drop the 200% tax on imported whisky it imposed in July.

Singh said Chehal now accepts that the tax increase was playing into the hands of the bootleggers who control 85% of India's spirits imports.

"What we've told them is that this is the best opportunity to bite into the grey market. We've actually shown them a map of how the illegal stuff comes into the state."

Maharashtra imposed the tax after the Indian government bowed to pressure from the World Trade Organisation and slashed tariffs on imported whisky, which had previously been as high as 550%.

Whisky producers now expect Maharashtra to impose a flat tax of between 200 and 400 rupees a bottle, bringing prices roughly in line with those in Delhi, where the local Government left taxes unchanged after the cut in national import tariffs.

Delhi and Mumbai together account for roughly 70% of the Indian spirits market.

The local Government in Calcutta has cut taxes on imported spirits, making Scottish imports very competitive with local premium brands.

According to the Scotch Whisky Association, India buys more Scotch whisky - one million cases in 2004 - than either China (700,000 cases), Russia and Poland (600,000 each) or Turkey (200,000).