India has thwarted the first attempt made by the European Union (EU) for a WTO investigation in the additional customs duties on imported liquor imposed by the country.EU has been claiming that additional import duties imposed by India on foreign liquor are not compliant to WTO norms. It had asked for the formation of a panel in WTO's Dispute Settlement Board. The United States is also likely to ask for similar proceedings.However, in a temporary setback for EU, WTO will automatically launch an investigation, once the former repeats its request for dispute settlement. "There was one chance for us and we took it," said a Commerce Ministry official.Indian officials added the matter may be resolved even without reference to WTO. The Finance Ministry is likely to introduce a legislation soon to scrap the additional customs duty on foreign wines and spirits. "This bill is likely to be introduced in the next session of Parliament, starting April 26," the official added. The legislation would allow states to charge extra duty on imported wines and spirits.As per India's commitments to WTO, basic customs duty on imported wines is 100%, while for spirits like whiskey and vodka, it is 150%. Additional customs duty in the form of countervailing duty on imported spirits and wines was imposed in 2001 to create a level playing field between domestic and foreign liquor companies as states cannot levy duties on foreign made liquor.Industry sources maintain that additional customs duty in foreign spirits ranges from 25% to 150% while in imported wines, it is 20 to 75%. But due to a combination of customs and the additional duties, the effective import duty becomes as high as 264% for wines and 550% for whiskies, depending on the brand.
