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Foreign distillers pitch for lowering of duty barrier
Wednesday, 15 January 2003, 20:30 IST
NEW DELHI: Foreign distillers, who have been invading India in recent years with a view to slake the thirst of its growing middle class, have urged the government to sharply lower duties on import of spirits.
A reduction in duty tariffs in the forthcoming annual financial budget for fiscal 2003-04 would increase imports and boost revenue to the government while sharply reducing illegal imports, they say.
"Our demand for lowering of the prevailing duty structure in India has been supported by the European industry and many international spirit producers," said Tim Jackson, director (international affairs) of the Scotch Whisky Association.
"At present, the import duties are so high that products are coming into India mostly through illegal channels. The prevailing situation is in no one's interest," Jackson told IANS.
"If they (the Indian government) take a pragmatic view, they will realise if the import barrier is lowered it will create a win-win situation for both the industry and the government.
"We see the forthcoming budget as an opportunity to secure genuine market access for imported spirits."
According to the Scotch Whisky Association, one of the largest lobbying groups for Scotch producers and distillers globally, a duty cut would allow a host of foreign firms to bring their products within the reach of India's growing middle class.
India's wine industry is estimated at about 400,000 cases a year. The locally made wines that are priced below 
150 per bottle drive the volume in the sector.
The total federal duty burden on imported bottled spirits and wines ranges between 340 percent and 413 percent, limiting the access of foreign liquor firms to the Indian market.
Despite stiff duties, international liquor firms such as Seagram, Bacardi, Allied Domecq, Guinness UDV, LVMH Moët Hennessy Louis Vuitton and Italian winemaker Giacomini Company have rushed to India since the liberalisation of the early 1990s.
Analysts say the foreign distillers are making a beeline to India because the country of over one billion people is a tantalising market for alcoholic beverage firms, which look to Asia for growth because sales have stagnated in major markets.
The foreign alcoholic beverage companies are betting that consumption will grow as the increasingly affluent middle class expands and seeks more foreign brands.
The foreign companies, however, are currently facing stiff competition when it comes to selling their alcoholic beverages produced overseas from well-entrenched Indian companies whose products are much cheaper.
"The government also stands to gain because lowering of import duties will result in increase in revenue and reduction in smuggling. The domestic industry is also very worried about cheap imports coming from South Asian countries.
"The only winner of the prevailing situation is the bootlegger. Spirits bottled abroad are still beyond the reach of most Indian consumers," said Jackson.
India consumes about 80 million 12-bottle cases of spirits a year, but official imports account for less than one percent of consumption, according to the Scotch Whisky Association.
"After removing the quantitative restrictions on imports of bottled spirits in 2001, the government introduced this very high rate of additional duties," said the Scotch Whisky Association official.
"In fact, the prevailing federal duty burden on imports is higher than what it was before the quantitative restrictions were removed," he added.
New Delhi was compelled by a World Trade Organisation pact to remove quantitative restrictions on all imports from April 1, 2001.
The government, however, was allowed to slap additional tariffs on foreign-made alcoholic beverages to protect its domestic wine industry. Each of the states levies additional duties.
Jackson said although the Indian duty regime breaches the World Trade Organisation norms, the association is not planning to drag the government to the dispute settlement panel of the Geneva-based multilateral trading body.
"We prefer issues to be resolved in a amicable manner."
Source: IANS
150 per bottle drive the volume in the sector.
The total federal duty burden on imported bottled spirits and wines ranges between 340 percent and 413 percent, limiting the access of foreign liquor firms to the Indian market.
Despite stiff duties, international liquor firms such as Seagram, Bacardi, Allied Domecq, Guinness UDV, LVMH Moët Hennessy Louis Vuitton and Italian winemaker Giacomini Company have rushed to India since the liberalisation of the early 1990s.
Analysts say the foreign distillers are making a beeline to India because the country of over one billion people is a tantalising market for alcoholic beverage firms, which look to Asia for growth because sales have stagnated in major markets.
The foreign alcoholic beverage companies are betting that consumption will grow as the increasingly affluent middle class expands and seeks more foreign brands.
The foreign companies, however, are currently facing stiff competition when it comes to selling their alcoholic beverages produced overseas from well-entrenched Indian companies whose products are much cheaper.
"The government also stands to gain because lowering of import duties will result in increase in revenue and reduction in smuggling. The domestic industry is also very worried about cheap imports coming from South Asian countries.
"The only winner of the prevailing situation is the bootlegger. Spirits bottled abroad are still beyond the reach of most Indian consumers," said Jackson.
India consumes about 80 million 12-bottle cases of spirits a year, but official imports account for less than one percent of consumption, according to the Scotch Whisky Association.
"After removing the quantitative restrictions on imports of bottled spirits in 2001, the government introduced this very high rate of additional duties," said the Scotch Whisky Association official.
"In fact, the prevailing federal duty burden on imports is higher than what it was before the quantitative restrictions were removed," he added.
New Delhi was compelled by a World Trade Organisation pact to remove quantitative restrictions on all imports from April 1, 2001.
The government, however, was allowed to slap additional tariffs on foreign-made alcoholic beverages to protect its domestic wine industry. Each of the states levies additional duties.
Jackson said although the Indian duty regime breaches the World Trade Organisation norms, the association is not planning to drag the government to the dispute settlement panel of the Geneva-based multilateral trading body.
"We prefer issues to be resolved in a amicable manner."
Source: IANS