The EU has maintained that the additional import duties imposed by India on foreign liquors are not compliant with WTO norms and had asked for an investigation by a panel of the WTO''s Dispute Settlement Board. The United States is also likely to ask for similar proceedings.

However now, WTO will automatically launch an investigation, once the EU repeats its request for dispute settlement.

Indian officials said the finance ministry is likely to introduce a legislation soon to scrap the additional customs duty on foreign wines and spirits. The legislation would allow states to charge extra duty on imported wines and spirits.

As per India''s commitments to WTO, basic customs duty on imported wines would be capped at 100 per cent while spirits like whiskey and vodka would attract 150 per cent. Additional customs duty in the form of countervailing duty on imported spirits and wines was imposed in 2001 to create a level playing field between domestic and foreign liquor companies as states cannot levy duties on foreign made liquor.

Additional customs duty in foreign spirits ranges from 25 per cent to 150 per cent while on imported wines, the duty is 20 per cent to 75 per cent . But due to a combination of customs and the additional duties, the effective import duty goes up to a huge 264 pc for wines and 550 per cent for whiskies, depending on the brand.