EU reopens WTO complaint against India over drink duties

GENEVA: The European Union on Monday said it was reopening a challenge at the WTO against India over import duties imposed by New Delhi on alcoholic drinks, lifting an earlier suspension of the complaint.

The EU had suspended a complaint in July 2007 after India announced that it would cut import duties on beer and spirits.
But the European Trade Commission said Monday that in states such as Goa, Maharashtra and Tamil Nadu, among India's largest wines and spirits markets, tariffs on alcohol remain high.

"The EU will today request WTO consultations with India on its domestic tax regime for spirits and wines," it said in a statement in Geneva, home to the World Trade Organisation (WTO).

The EU claimed that the custom tariff for imported alcohol reached 150 percent, and that "discriminatory internal taxation in some Indian states adds further to this burden for importers."

Maharashtra imposes a fee of some 200 percent on imports, while exempting local goods from excise duty, said the European Spirits Organisation.

In Goa, a special fee was also added to imports, the EU added.

"In both cases, internal taxes are applied only to imported wines and spirits, or at a much higher rate for imports than domestic goods. This is a breach of the WTO's national treatment principle, which requires that WTO members treat imports and domestic goods the same," said the commission.

In Tamil Nadu, "restrictive retail and wholesale practices" also appeared to be continuing.

The European Spirits Organisation's Director General Jamie Fortescue said the association welcomed Brussels' move and said it was "disappointing that trade barriers have now emerged at state level."

The EU first lodged its formal complaint on the issue against India in December 2006.

Subsequent bilateral negotiations failed to resolve the dispute over the tariffs imposed by India's government and some regional state authorities.

The EU subsequently stepped up its action with the request for a WTO panel, before suspending the complaint after India promised cuts.

India's 1.1 billion strong population and fast-growing middle class represent a potentially huge market for wine and spirits exporters.

In 2007, EU spirits exports to India reached 57 million euros (83.29 million dollars), and 11 million euros for wine.