has decided to scrap additional customs duty of up to
150 per cent on imported wines and spirits and make
the tax structure on these products compatible with
its international commitments.
decision comes after the US and the European Union dragged
India to the World Trade Organisation over high duties
on wines and spirits.
are planning to scrap the duty by July and allow states
to impose taxes equivalent to the levy on domestic wine
and spirit makers,"'' sources at the commerce ministry
government proposes to do this through an executive
order. States would also be able to impose additional
taxes without having a central legislation allowing
them to do so, sources said.
the taxes states would impose over and above the basic
customs duty would be WTO compatible, as the state level
taxes will be equal to the burden imposed on domestic
import duties on wines and spirits are as high as 264
per cent and 550 per cent. The government imposes additional
duties on wines and spirits as a countervailing duty
to compensate excise duties imposed by states on domestic
domestic liquor lobby has been opposing lowering of
import duties on spirits and wines.
reduction in customs duties on liquor imports should,
however, benefit liquor baron Vijay Mallya who just
a week ago acquired the world''s fourth largest maker
of Scotch whisky-Whyte & Mackay. Mallya''s UB group
controls over 60 per cent of the domestic spirits market.
consumption in the country has been growing at 8 per
cent annually, and that for wines at 17 per cent. EU
has been very keen to break into this attractive market
but the stiff rates have made imported liquor far more
costly compared with domestic ones.
will be among the top five fastest-growing markets for
the next four years, market research body Euromonitor
duty cut will enable liquor majors like Diageo Plc and
Pernod-Ricard SA to increase sales in India where the
fastest wage growth in Asia gives consumers more to
spend on wines, gins and whiskeys.