Exporters in high spirits over Indian charge change
following the decision yesterday by the country's Central Board of
Excise and Customs (CEBC) to withdraw additional duties on foreign
alcohol products.
The CEBC said that the additional duty imposed over the 150 per cent basic customs charge on spirit and liquors and 100 per cent on wines and beer would no longer be permitted, following consultation with the state governments. As a result of the amendments the basic charge on wines and beers will be lifted to 150 per cent in line with changes on the spirit sector though. Increases aside, the decision has still been welcomed by foreign beverage groups, which will now be able to better compete with domestic brands in the country in terms of pricing. The abolition of the additional tariffs will be considered a victory for producers in the EU, who have long lobbied through the World Trade Organisation (WTO) to remove the additional duties it claimed were a "blatant violation" of its rules. Opponents of the charges agued that tariff rates ranged from 177 per cent to 550 per cent in some cases and as such, were not "equivalent to an internal tax". The country houses a sixth of the world's population, and, despite a vast number of people on low incomes, it is viewed as a market with high potential. This potential according to some beverage producers has been hindered by the previous customs charges. Scotch whisky exports have been hit hard, with sales in the country dropping by six per cent last year, according to the Scotch Whisky Association (SWA), which had pressed harder than most for action against India. Gavin Hewitt, chief executive of the SWA therefore welcomed the decision of the Indian government into moving to reduce the charges, despite concerns regarding the future of its domestic alcohol brands and loss of tax revenue. "Reform will not transform the scotch whisky market in India overnight - a basic customs euty of 150 per cent will continue to apply - but it opens up new possibilities for Scottish distillers to compete with domestic producers on a level playing field for the first time," he stated. "This is also good news for Indian consumers, who can look forward to a greater choice of internationally renowned scotch whisky brands."
