by Hervé Lalau and Subhash Arora
The European Union will ask the World Trade Organization to launch a formal complaint against Indian barriers on wine and spirits imports. Given that special taxes are added to customs duties, the Indian tariffs on alcoholic drinks are extremely high, varying between 177 and 540%, says the Brussels based European Spirits Organisation (CEPS). In the state of Tamil Nadu, the situation is even worse, where only Indian wines and spirits are allowed to be sold in stores.
India is already a large market for spirits, with 780 million litres consumed annually, and, with 6 million litres, to a lesser extent wine; but imports from the European countries are small: 23 million Euros for spirits and 4 million for wine. India, on the other hand, exports €40 billion in goods and services to Europe. Despite a population of more than 1.1 billion, India ranks 89th in European wine exports. The complaint would be the EU\'s first case of any kind filed against India at the Geneva trading arbiter since 2003, the report said.
The WTO threat may be seen as a negotiating tool for European Commissioner Peter Mendelson, who was in China last week lobbying for the country to open up more markets to European companies. He is traveling to India this week, and is expected to bring up the wine tariff issue again. "It is our intention to go ahead with a formal request for consultations at the WTO on Nov. 17,” Peter Power, a spokesman for the European Commission in Brussels.
This action follows five years of diplomatic efforts and the failure of global trade talks, which resulted this past summer in the European Commission sending a critical report to Indian authorities. India claims that they will not acquiesce until Europe admits Indian whisky into its markets. This wish has been rejected based on the fact that the Indian version made from molasses and should thus not be referred to as "whisky”. When they should be enjoying the Indian boom in wine consumption, which grew by over 30 percent last year, European wine producers feel hostages to this crisis.
