India’s Heavy Duties on Alcohol Under Attack Again

taxeswine1.jpg The saga over alcohol tariffs in India continues with the Scottish Whiskey Assocation (SWA) complaining to Indian officials over the duties levied on imported spirits across India. Last year the Scottish industry, won a 20-year battle against the tariff system forcing the central government to lower taxes from 550 percent to 150 percent.

The SWA is complaining that the ruling is being flouted by new levies being imposed by individual states reports the Times of London.

Apparently, just 1 percent of the estimated billion litres of whiskey consumed in India is produced outside of the country. Mr Vijay Mallya, who bought Whyte & Mackay for £595 million in 2006, controls about 60 per cent of the Indian whisky market. He accused the SWA of being “paranoid” about India and gave warning that the body’s “heavy handed” approach could jeopardise Scottish distilleries’ prospects in the country.
Furthermore, as the article reported, India is set to triple its wine consumption in the next three years adding about 188,000 hectolitres according to The International Wine and Spirits Record (IWSR). The number of foreign residents, tourism and the rising middle class are all driving this consumption. But as the article added, only 25 percent of the wine consumed in India is imported as the domestic vintages enjoy the protection of foreign duties. Per capita consumption of wine in India languishing at about 9 ml, compared with 400 ml in China. As a result, foreign producers around the world are eying the Indian market.
Susan Schwab, the US Trade Representative has complained about the duties in the past and recently noted that at duty-free shops, where Indian duties do not apply, US exports for wine grew 350 per cent from 2000 to 2005.

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