India scraps extra duty on
5 July, 2007: In a development that
is sure to cheer consumers of imported
alcohol, the Government of India has
abolished additional customs duties on
liquor, including wine and beer.
The Central Board of Excise and
Customs, which notified the duty cut,
however, allowed state governments to
impose additional levies equivalent to
taxes on domestic manufacturers.
The Indian government’s decision is in
keeping with the commitments India has
made to the World Trade Organization (WTO).
The United States and the European
Union had complained to the WTO
earlier in 2007 that the additional
duties levied by India on imported
spirits militated against India’s
commitments to the international trade
With a view to protecting domestic
manufacturers, India had imposed
additional duties ranging from 150% to
550% on imported wines and spirits
after easing import regulations for
the same in 2001.
The World Trade Organization's rules
allow imposition of duties up to a
maximum of 150%.
The Indian government had increased
basic customs duty on wines from 100%
to 150%, while all other foreign
liquor would also attract a maximum
customs duty of 150%.
The taxes on these commodities would
now be equivalent to the levies
imposed on domestic wine and spirits,
and this would reduce the prices of
imported liquor in the Indian retail
The World Trade Organization had set
up a disputes settlement body to look
into the complaints by the United
States and the European Union.
Importers of wine and spirit have
welcomed the Indian government’s
decision, saying that they have been
asking for it for many years.
The influential Scotch Whisky
Association (SWA) said it was “good
news” for Indian consumers.
The Scotch Whisky Association said
that it has been campaigning for the
last six years at various levels with
the British government and the Indian
government as well as the European
Union, the United States and the WTO
to reduce India’s high import duties.
The duties were seen as a major
obstacle by Scotch whisky exporters,
who were keen to enter the vast Indian
market for spirits and wines. It was
when the prolonged negotiations with
the Indian government failed that the
industry groups approached the World
Trade Organization to resolve the
According to SWA figures, sales of
scotch whisky reached record levels in
2006, when exports rose by 4% to 2.5
billion pounds – surpassing the
previous high of 2.4 billion pounds in
1997. The volume of shipments also
rose by 6% in 2006 to over one billion
The demand for imported spirits is
high in India as the country’s booming
economy has ensured high disposable