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Scotch makers lobby for duty-cut kick

New Delhi, Jan. 7: Scotch whisky makers in the UK are lobbying the Indian government hard for a sharp reduction in import duties and local levies on imported spirits that make India one of the biggest markets for smuggled and spurious scotch whisky.

The Scotch Whisky Association of the UK has suggested a four-part tariff initiative to lower levies on imported spirits. The association wants this tariff incorporated in the budget for 2003-04.

At present, India levies 182 per cent on imported spirits, which is the bound rate sanctioned under the Uruguay round of GATT. It isn't going to slide by much-under the graduated rollback plan: India is committed to bring down its levy to 166 per cent by April 1, 2003, and 150 per cent by March 2004.

Other leading developing countries have low tariff levels: China has 37.5 per cent which it is committed to bring down to 10 per cent, Brazil has 20 per cent and South Africa has 3 per cent.

As a first step, the association has suggested a switch over to a specific import duty of Rs 100 per bulk (liquid) litre to all spirits in lieu of bound Uruguay rate of 182 per cent which is ad valorem.

As a result the duty rationalisation, consumer prices of imported spirits will go down; the incentive to smuggle and bottle will be reduced as consumers will switch from the grey market to duty-paid channels with a consequent increase in the government revenue.

Tim Jackson from the SWA said, “We have also demanded abolition of the 4 per cent additional duty. The federal duty on imported spirits remain in excess of state excise duties imposed on domestic products, thereby breaching GATT article 3.2.”

The international spirits industry of UK has proposed “elimination of this federal duty with each state applying an equivalent levy at a rate identical to the excise tax levied on domestic spirits on March 1, 2003, as part of the union 2003-04 budget”.

Third, it has demanded that either special additional duty of 4 per cent or central sales tax should be applied on the imported spirits. The federal duty is intended to apply to imported goods including spirits in lieu of state sales tax. In practice, however, in West Bengal, Maharashtra and Punjab imported spirits are liable to central sales tax and state sales tax thereby breaching GATT article 3.2.

Lastly, the association seeks application of all state taxes and levies at an identical rate to all imported and domestic spirits in each state from March 1, 2003, as agreed to by the Union budget of 2003-04 or at the time of the presentation of state budgets.

Jackson said, “We will be meeting the commerce ministry and other ministries during our two-day visit and put forward our proposal. We hope it gets included in the budget this year as it will be beneficial for both counties.”

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