New Delhi, July 3: India today scrapped the additional customs duty of up to 150 per cent over and above the normal levy on wines and spirits. This amounts to a concession of 25 per cent on imported liquor.

The Central Board of Excise and Customs today notified the duty cut. The government also said states should impose local levies on imported liquor equivalent to that imposed on domestic wines and spirits to bring them on an equal footing. States will take some time in following this fiat. However, once they rework their levies, duties on imported liquor would be reduced significantly.

However, imported liquor, which now attracts a gross duty of 250-550 per cent, will still be costlier than locally produced wines and spirits. India will now ask the European Union to open up its market to Indian whisky.

According to the EU, European whisky is made from grain while Indian whisky is distilled from molasses. Hence, they cannot be treated as the same. The EU describes Indian whisky as rum, something which local manufacturers are unhappy about. The government is trying to hammer out a compromise formula on this issue.

India has done away with the additional customs duty following complaints by the US and the European Union to the WTO that New Delhi was violating the limit set by the multilateral body. The WTO has already set up dispute settlement panels to hear these cases.

The wine and spirit importers welcomed the decision saying that they have been asking for it for the last four years.

While removing the additional customs duty, the government has increased the basic customs duty on wines to 150 per cent from 100 per cent.