New Delhi: The retail price of some imported liquor may fall by around 27% as the government plans to shortly issue a notification to partially eliminate customs duty on all imported wines and spirits. The government’s plan will help India meet its obligations to the World Trade Organization (WTO), said a senior official of the commerce ministry.
The government’s plan to eliminate additional customs duty comes in the wake of a dispute with the European Union and the US on high tax rates on imported liquor. The US had filed a complaint with WTO’s dispute redressal body on India’s “excessive levies.” The duty is more than 500% in some states on account of the combination of Central and state taxes.
If the additional customs duty on Famous Grouse, an imported scotch, is removed without any other adjustments in the tax structure, the retail price could fall by up to 27% in New Delhi, said Paramjit Singh, country head, Highland Distillers Group Ltd. The retail price of Famous Grouse in Delhi would fall to Rs1,100- 1,150 from the prevailing level of Rs1,500. The fall in price would boost Famous Grouse’s competitiveness in relation to Scotch bottled in India such as Teachers, said Singh. Teachers sells for about Rs800 in Delhi, he added.
The additional customs duty on imported wines and spirits is multi-tiered, varying from product to product.
Excise duty on alcohol is charged by states and varies across the country. The duty is being removed as India is obliged to extend national treatment on imported liquor, which means that the duties charged on imported liquor cannot be different from that made or bottled locally.
The states could still prevent India from meeting its obligations to WTO, said a trade economist who did not wish to be identified. “How does this proposed move solve the problem in a federal structure,” he asked, adding that some Indian states levy differential duties on liquor depending on whether it originated within their boundaries or beyond.