"India wants to avoid that the matter goes to the WTO's dispute settlement body. I hope a solution could be found as the matter is being discussed at the highest level," commerce and industry minister Kamal Nath said after meeting EU agriculture commissioner Mariann Fischer Boel.

The US has, meanwhile, approached the WTO against India over the high customs duty it imposes on import of wine and distilled spirits.

"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," US trade representative Susan C Schwab said.

India, however, said it wants the issue to be resolved before the matter goes to the dispute settlement mechanism at the multi-lateral body.

While the US had moved the WTO with a complaint against India, the EU had already filed a complaint and is threatening to press for a dispute settlement panel to begin litigations, Kamal Nath said.

Imported wines and spirits are taxed at rates ranging from 264 per cent to 550 per cent in the country

Nath, however, said that while the US and the EU were free to complain to the WTO, discussions were on with the governments and a solution would be found.

Nath also told Boel about discrimination being faced by Indian whiskey makers in European markets. Boel pointed out that Indian whiskey couldn't be sold in Europe as whiskey since it is made from molasses and not grain.

India had committed that its tariffs on wines and spirits would not exceed 150 per cent while it imposes an 'additional duty' and an 'extra additional duty' on top of the basic customs duty on imports of wine and distilled spirits, resulting in aggregated duties on these imports ranging from approximately 150 to 550 per cent.

Under WTO rules, parties that do not resolve an issue through consultations may refer the matter to a WTO disputes settlement panel.

"With its fast-growing middle class, India could be an important export market for American wines and distilled spirits if not for these layers of duties," Schwab said.

In cases where wine and distilled spirits may enter India under special duty-free rules, such as for airport duty free and use in luxury hotels, US exports of these products to India have gone up by 350 per cent and 200 per cent respectively between 2000 and 2005.

However, because of the high duties imposed on the vast majority of American wines and spirits, total exports to India remain low.