ENOUGH IS ENOUGH: THE EU FINDS “BLATANT VIOLATIONS” IN INDIA’S IMPORT TAX

The lucrative Asian market is a big target nowadays for wine and spirits companies, particularly in India where UB Group’s Vijay Mallya is making a big name for himself. Many companies are looking to move there or already have an operation in effect – just last week Foster’s sold its brewery operations to SABMiller, making it an even bigger player. However, some alcohol beverage companies are content with merely importing their products and taking advantage of India’s burgeoning wine and spirits market, despite the country’s outrageous duty system.

For years now the UK’s Scotch Whiskey Association has criticized India for wrongfully imposing expensive taxes, up to 550%, on imported wine and spirits. Expensive alcohol, they claim, has prevented access to the Indian market and fueled the circulation of counterfeit products. (Spirits brands produced in India are allowed into the EU without excess tariffs). The SWA also accuses Vijay Mallya of ensuring that the restrictive import duties are not removed, thus preventing European companies from accessing the multimillion-dollar Indian market.

Based on complaints issued in July 2005, the European Commission initiated an investigation in September 2005 and has now concluded that the levy amounts to "blatant cases of breaching fundamental WTO rules.” If India does not soon get rid of the import duties for whiskey and wine, the EU will take the case to the WTO for settlement, claiming that their investigations “has been marked by the refusal of the Indian government to cooperate effectively.”