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EU Wine and Spirit Producers Hail WTO Scrutiny of Discriminatory Indian Tax Rules

Source: FLEXNEWS
22/09/2008

22 Sept - Wine and spirit producers in Europe have welcomed moves to refer what they see as discriminatory taxing of their products by Indian authorities to the World Trade Organisation (WTO).

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The European Spirits Organisation (CEPS) and the Comité Européen des Entreprises Vins (CEEV) have endorsed the request by the European Commission (EC) for the WTO to examine Indian state taxation of European  wines and spirits. They described the EC bid as a “move to create a more level playing field in a key market.”

The drinks manufacturing bodies said they recognised that India’s federal government had made efforts to create an equitable regime with the abolition of additional duties on imported wine and beer. However, in a joint statement, they said discrimination against European wines and spirits persisted at a state level and hailed the WTO consultation as “the most effective way of addressing them”.

The bodies said there was new evidence that the Indian states of Maharashtra, Goa and Tamil Nadu continued to restrict access to their markets for wine and spirit imports, thus contravening India’s WTO obligations.

They claimed Maharashtra had granted domestic wine producers a ‘tax holiday’ while adding a 200% fee to imported products. CEPS and CEEV also said Goa imposes higher taxes on foreign wines and spirits. The groups said the moves are significant as the two provinces account for 50% of spirit and wine consumption in the lucrative and growing Indian market. Meanwhile, Tamil Nadu restricts the retail distribution of imported EU wines and spirits, they said.

CEPS, Director General, Jamie Fortescue, stated: “The European spirits industry fully acknowledges the significant progress India has made on market access for wines and spirits, especially the removal of the ‘Additional Duty’ in 2007. It is therefore disappointing that trade barriers have now emerged at state level, and we hope that the WTO consultations lead to a mutually agreed solution. All we are asking for is a level playing field.”

CEEV Secretary General José-Ramón Fernández, added: “The European wine sector is concerned about the restrictions to our products in some Indian States. It does not seem acceptable to allow for the reintroduction at State level of the illegitimate restrictions which were intended to be removed at federal level. All we are asking for is a level playing field for international producers seeking access to the promising Indian wine market in the benefit of both the Indian amateurs of wines and fair trade.”

India is one of the largest spirits markets in the world, with an estimated annual consumption of more than 100 million cases. The growing wine market is estimated at 1.2 million cases - 200,000 cases of which is imported wine.

EU exports to India amount to EUR 57 million for spirit drinks (around 1% of the market), and 11 million Euros for wine.

When a country is referred to the WTO for consultation, a formal 60 day dialogue between the parties takes place in order to resolve the dispute. In cases where no agreement is reached, a Dispute Settlement Panel consisting of trade experts who consider and rule of the merits of the case, may be established. The Panel then makes recommendations on how the disputed measure can be made to conform to WTO rules.



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