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Scotch Whisky body to press for scaling down import tariffs

K. Giriprakash

Seeks fair market access for imports in line with WTO rules

Bangalore , March 10

With the Union Budget completely ignoring foreign liquor companies' plea to scale down import tariffs, the UK-based Scotch Whisky Association (SWA) is readying itself for a full-scale trade war.

"If India continues to apply a tariff and tax system for imported spirits that is not in line with its international commitments, the industry will need to consider its options and may be obliged to consider pressing the EU (European Union) to take the matter to WTO dispute settlement," Mr David Williamson, a spokesperson for SWA told Business Line.

Considered the largest whisky market in the world, with a size of around 70 million cases a year, it is turning to be extremely frustrating for the foreign liquor firms that they have not been able to come even within the sniffing distance of the huge market.

Powerful domestic market

The aggressive stand of SWA isn't helping matters either as an industry analyst said that the domestic industry is too powerful to be `bullied' by outsiders. "They have to be careful on how they approach the issue," he said. But to a specific question whether veiled threats and allegations of protectionism could lead to a direct confrontation with the Government, Mr Williamson, who is the public affairs' manager for SWA, said: We hope India will take the opportunity of the current formal discussions with the EU, which is examining India's import regime for EU spirits and wines, to agree measures which would result in fair market access for imports in line with WTO rules. We strongly support this process."

Currently, complaint by the EU spirits and wine industries in June 2005 regarding the Indian import regime made under the EU Trade Barrier Regulation procedure is under investigation. A report is expected soon. Overall duty on imported liquor on Scotch Whisky ranges between 212 per cent and 525 per cent.

`Discriminatory' claim

But the crux of the problem, according to analysts, is that SWA does not recognise whisky made by molasses, which the UB Group chairman, Dr Vijay Mallya, and a few other domestic industry leaders claim, is highly discriminatory.

Mr Williamson, however, says that this issue should not be the cause for high import duties. "With market access for imported spirits still unfairly restricted by a discriminatory fiscal regime, the Indian Government itself must start to change its approach," he said.

Mr Williamson said India's current discussions with the EU are an opportunity for the country to make appropriate changes to the duty structure which would in turn allow Indian consumers to have more choice at a reasonable price. "The SWA continues to support efforts to reach an early agreement with India and believes a negotiated solution to the market access problems would be the best way forward," he said.

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