India has succeeded in blocking an investigation by the WTO on its import duties on American wines and spirits, temporarily delaying a US government complaint over allegations that Indian rules discriminate against products such as Napa Valley wine and Jack Daniel''s whiskey.

The Geneva-based WTO is currently reviewing a European complaint on restrictive tariffs on wines and liquors from a number of state governments in India.

A second investigation by a panel to examine a similar complaint from the US is expected to be established at a meeting later this month of the WTO''s dispute settlement body as under WTO rules, a second request for a formal investigation is automatically approved.

A case can result in punitive sanctions being authorized, but panels take many months, and sometimes years, to reach a decision.

It is unclear if the U.S. and the EU will seek to become co-complainants by combining their separate WTO cases.

US trade representative Susan Schwab said last month while announcing its intention to seek litigation, "The layers of customs duties India applies to US products, in particular to wine and distilled spirits, are not in line with its WTO commitments. We must ensure a level playing field for US products around the world."

India''s basic import duties on wine are 100 per cent, while the tariff on spirits is 150 per cent, both within WTO limits. However, various government surcharges take the tariffs up to levels reaching as high as 550 per cent, depending on the state the imports are bound for.

Tamil Nadu goes further by shutting out foreign alcohol and allowing shops to sell only Indian-made spirits and wines.

On the other hand, China adds on only a 10 per cent charge on foreign liquor, while the US, the EU and Japan, allow nearly all spirits to enter their markets duty-free.

India is one of the largest markets for alcohol in the world and has huge potential for growth.

The US said wine sales in India through special duty-free rules, such as at airports and luxury hotels, grew by 350 per cent between 2000 and 2005. The growth was 200 percent for American liquors.

But high import duties imposed on the vast majority of American wines and spirits means total exports remain low, the US says. The Distilled Spirits Council of the United States estimates that all foreign liquors together account for less than 1 per cent of the Indian market.