The Telegraph
Since 1st March, 1999
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Hic! A hitch in Scotch exports
- 6 per cent dip, blame on tariffs

London, April 10: Exports of Scotch whisky to India in 2006 fell by 6 per cent to £24 million, compared with 2005, according to figures issued by the Scotch Whisky Association.

The association blames “discriminatory tariffs imposed by India” to explain the fall, which goes against the general trend of increasing exports, now worth a record £2.5 billion a year, to the rest of the world.

Given that the more discriminating among middle class Indian executives prefer to drink the real stuff from Scotland and are increasingly able to afford to do so, the drop in exports to India is baffling.

One reason might be that some of the middle classes, especially women, are turning to wine, food and drink, experts say.

At parties in the UK, especially corporate gatherings to launch new books, films and products of one sort or another, it is customary to serve wine and mineral water rather than spirits. Indian women can usually be seen drinking wine and often in impressive quantities.

It is only when Indians from India arrive that the call goes out for whisky.

Despite the drop in exports, the association is optimistic about future prospects in India. It certainly intends to pursue its case for lower tariffs through the European Union’s dispute settlement panel.

The association’s spokesman, David Williamson, told The Telegraph that EU officials would formally meet tomorrow and begin setting up the panel with a view to persuading the Indian government to cut duties on whisky.

Cutting the tariff, Williamson argued, would give Indian consumers greater choice, the government higher taxes and be of benefit for all parties.

The association does not yet know how whisky exports in the first three months of 2007 are performing. This is because it gets its figures from HM Revenue & Customs.

The association says it has detected signs that India does not want a clash with the EU over whisky.

“There are suggestions that India is considering ways of bringing the duties’ regime in line with WTO rules,” Williamson commented.

Although sales of £24 million is modest, the association considers the Indian market as “significant in global terms” and would much rather resolve differences without having to go through the EU disputes panel.

Williamson would not be drawn on a report in the Scotland on Sunday newspaper that “in a humiliating climbdown, minister for commerce Kamal Nath said that India is considering cutting import duties on wine and spirits to avoid having the issue decided by the World Trade Organisation”.

The paper said Gavin Hewiit, chief executive of the Scotch Whisky Association, had returned after talks in India “sniffing victory”.

According to the association, “China’s exciting growth continued, with shipments rising by 27 per cent to £58 million (in 2006), and the market entering the industry’s top ten by value for the first time. The high level of shipments to Singapore (up 33 per cent to £86 million) reflect its role as a key distribution hub into China and South East Asian markets.”

It adds: “The US market for premium spirit drinks remained buoyant. It is the industry’s largest export market by value, with total exports reaching £400 million for the first time (up 7 per cent).”

Peter Mandelson, the EU Trade Commissioner, said in a statement: “India has maintained extremely high duties on imported spirits and wines for many years. They restrict European exports and are in clear breach of WTO rules. As we could not resolve our dispute in consultations, the EU sees no other way than to request the establishment of a WTO panel. We are, of course, not closing the door to an amicable solution — but the ball is now in India’s court.”

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