US to move WTO against Indian duties on wine and spirits

Mumbai: The United States would ask the World Trade Organisation to investigate whether India''s import duties on US products such as Napa Valley wine and Jack Daniel''s whiskey violate global trade rules, US trade negotiator Susan Schwab said.

Schwab''s statement comes a month after the WTO established a panel to examine a European complaint against wine and liquor restrictions in a number of Indian states.

"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," Schwab said in a statement. "We must ensure a level playing field for US products around the world," she added.

India imposes a basic import duty of 100 per cent on wine and a 150 per cent tariff on spirits – both within WTO limits. However, various surcharges take the tariffs to levels as high as 550 per cent, depending on the Indian state.

Tamil Nadu has a total ban on foreign alcohol and allows shops to sell only Indian-made spirits and wines.

In contrast, China imposes only a 10 per cent charge on foreign liquor while the US, the EU and Japan apply no tariffs on nearly all imported spirits.

"We are disappointed that WTO consultations failed to resolve our concern with the duties and that we must resort to a WTO panel," Schwab said.

The US statement said additional duties are also applied on other American exports such as dairy products. The fees sometimes exceed maximum levels permitted by the Geneva-based trade organisation, it said.

Though it may take months, and sometimes years, to arrive at a decision, a case can result in authorisation of punitive sanctions.

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

The US said American wine sales in India through special duty-free rules, such as airports and luxury hotels, grew 200 per cent between 2000 and 2005 against an overall growth of 350 per cent

Meanwhile, the 27-nation EU, in its complaint, said its alcohol exports to India accounted for only a small percentage of total world sales. India bought euro23.3 million ($31.3 million) worth of European spirits in 2004 - from Scottish whisky to Finnish vodka - and euro4 million ($5.4 million) worth of wine. That compares with global European spirits exports amounting to euro5 billion ($6.7 billion) and wine exports of euro4.5 billion ($6.1 billion) each year.