24th September 2008

Taxes are high, spirits are low: The EU reopens complaint on Indian alcohol duties at WTO

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Taxes on imported alcohol in India remain high despite the government agreeing to lift duties in July 2007, says the European Union. According to the EU, the excessive tariffs are keeping European alcohol out of India, which has now given rise to the EU reopening a complaint against India at the WTO.

The EU first brought a complaint against India’s tariffs on alcohol and spirits, which were running from 150 to as much as 550 percent, in December 2006. Last summer, the challenge was dropped after India agreed to lessen duties.

But, the EU says, taxes remain exorbitant in some of India’s highest markets for alcohol such as Goa and Maharashtra, where Mumbia is located. According to the European Spirits Organization, Maharashtra and Goa together represent half of India’s wine and spirits consumption.

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

Both parties have 60 days to negotiate before a formal probe will be launched by the WTO.

For more information on the India-EU spirits challenge, see this week’s upcoming Bridges Weekly to be published 24 September.

ICTSD reporting; “EU Complains at WTO Over Indian Wine, Spirits Duties,” BLOOMBERG, 22 September 2008. “EU renews India WTO drinks case,” BBC, 22 September 2008.