India is considering slashing import duties on wine and spirits after the EU and the United States’s decision to file complaints before the World Trade Organization.
India has a lucrative alcohol market but the high duities keep the foreign companies from competing in the Indian market.
India’s basic import duties on wine and spirits - at 100 percent and 150 percent respectively - are within the WTO limits, but federal surcharges and state-level taxes take the tariff protection up to 540 percent in some cases.
India’s 2007-2008 budget, unveiled last week, didn’t lower the tariffs on wine and spirits.
Under the WTO rules, the first step in such cases is to encourage consultations between the member nations.
If there is no progress within 60 days, the aggrieved party can ask for a panel to be set up to rule on the dispute whose decision would be binding on both sides.
It is expected that the matter will be resolved before the WTO steps in to decide the issue.
India is one of the largest markets for alcohol in the world with a huge potential to grow, but imports account for a meager share in total consumption.
