First it was the EU and now its the United States which has complained to the World Trade Organisation against India because of the high duties it levies on alcohol products. The US Trade representative has been quoted in a Rediff report:
“We have raised this issue with the Government of India on several occasions over a number of years. We hope the matter can be successfully resolved in WTO consultations,” the US Trade Representative Susan C Schwab said in a statement.
India imposes import duties which are as high as 550 percent on spirits and 264 percent on wines. It is actually the additional taxes imposed by the states which makes this such a high figure. Such taxes are against ‘WTO provisions’ and the US has decided to litigate because India has not reduced the duties on alcohol products in its recent budget inspite of lowering duties on other imports.
Our government is now insisting that it has already planned to cut the centrally imposed customs duty on imported wines and spirits and regulate taxation at state level and that it will be done in a couple of months.
But why has the government sat on it so far? If India doesn’t resolve this dispute quickly, and the WTO rules against India, “the EU could impose retaliatory tariffs on imports.” I wonder why we need to have the gun pointed at our heads before we decide on these matters? It is obvious even to laymen like me that it is the domestic alcohol industry which has been putting pressure on the government to keep the rates high all these years. And some people in the government are making money for sure.
It also seems most unfair that the government has chosen to pander to the alcohol industry while other industries are bearing the brunt of foreign competition.
And from the consumer’s point of view I think it will be wonderful to have world class wines available at affordable prices. One thing you have to grant them over there. They make the most wonderful wines.