New Delhi, March 23: The government is likely to move a bill in Parliament next month to lower customs duty on imported wines and spirits in the wake of increased pressure by the EU and the USat the WTO. This would pave the way for cheaper retail prices of these beverages in the domestic market.
According to a senior official, the finance ministry will draw up a proposal, which will soon be taken to the cabinet for approval. The bill is likely to be placed when Parliament meets after a three-week recess, he said.
While the basic duty of 100-150 per cent on imported wines and spirit is in line with WTO norms, the additional customs of 25-150 per cent and state levies take the total tariff to the 250-550 per cent range.
The EU and the US have lodged a complaint on the issue with the WTO. India is keen to settle the issue with its leading trading partners instead of going through acrimonious legal proceedings at the WTO disputes panel.
The proposed legislation is expected to retain the basic customs duty but scrap the additional customs levy. The new rules would also make it mandatory for all states to levy excise duty on imported liquor equivalent to that imposed on locally produced wines and spirits so that they come on an equal tax footing.
Earlier this month, commerce minister Kamal Nath had told EU agriculture commissioner Mariann Fischer Boel that India was trying to find a way to lower the high duty structure for imported wines and spirits as certain legislative issues linked to the matter would have to be sorted out first.
Nath also brought up the issue of Indian whisky not being treated on a par with European whisky but Fischer Boel refused to budge on the issue.
She maintained that all whiskies in Europe were made from grain, while Indian whisky was distilled from molasses. Therefore the two could not be treated on a par.
The EU had expected the effective rate of customs duty on imported wines and spirits to be brought down to WTO peak levels in this year’s budget. However, the move did not come through as Indian liquor manufacturers had stepped up pressure on the government to guard their turf.
But with the US and the EU moving the WTO, the government has to factor in the fact that this could lead to retaliatory tariff hikes on Indian goods being exported to these countries which account for the largest chunk of India’s export earnings.