India is ready to face any action on the issue of high duty on wines and spirits imported from the European Union (EU) even as the two sides meet on November 6 for discussing trade and investment.
Maharashtra is the only state that has not complied with the Union government advice to lower levies on imported wines and spirits. The issue has already been sorted out with the Goa and Tamil Nadu governments, which have agreed to give ‘national treatment’ to the imported liquor, which stipulates that they be treated on par as domestic items.
Goa, Maharashtra and Tamil Nadu are among the biggest markets for imported wine and spirits.
“The commerce minister (Anand Sharma) has written a letter to the Maharashtra chief minister urging it to fall in line. The matter has already been settled with Goa and Tamil Nadu. EU knows very well that nothing can be done beyond this as it is a state subject. However, if it still take us to the World Trade Organization (WTO), we are ready,” a senior commerce department official told Business Standard.
The process of dragging a member country to WTO incurs heavy expense on the complainant and takes anywhere between two and four years. On a recent visit to India, Foreign Trade Minister of France Anne Marie Idrac said the country hoped the issue would be sorted out amicably soon without having to move WTO.
“The decision to take such an action would not be taken by the French or Germans; it would be decided by the Brussels bureaucracy. And at the moment there is no commission in place with the Lisbon treaty not ratified yet,” the official said, adding the issue would not hamper the ongoing negotiations on the India-EU free trade agreement.
EU had earlier dragged India to the WTO dispute settlement body in 2007, which resulted in slashing of additional Customs duty charged on imported spirits. The duty was as high as 550 per cent of the value of certain categories of spirits and up to 264 per cent for wines. The highest rate was brought to 150 per cent though the Union government hiked the basic Customs duties to 150 per cent from 100 per cent.
EU is the world’s biggest exporter of high quality wine and scotch. In 2007, EU’s spirits exports to India amounted to about €57 million (about Rs 395 crore) out of a total €7 billion exported to more than 150 countries. In the wine category, EU’s exports to India the same year amounted to about €11 million out of a total €6 billion.
The issue is likely to be discussed in the coming India-EU Summit. Negotiations to create a trade and investment agreement were initiated on June 2007, covering trade in goods, services, investment, intellectual property rights, competition policy and geographical indications, among others.
