INDIA WITHDRAWS ADDITIONAL DUTIES, BUT UPS BASIC TAXES
As we briefly reported last week, India has withdrawn additional custom duties on imported spirits and wines, which could go as high as 550% on spirits and 264% on wines in some states, thanks to prodding by the EU and US.
Previously, the basic import duty on wine and spirits was 100% and 150%. As a part of its new plan, the Indian government raised the basic duty on wine to match spirits at 150%, which is still high but falls under WTO regulation. All in all, the change could benefit spirits exporters, but hurt the wine guys.
On the brighter side, the improved tax increases will keep US wine and spirits as an affordable luxury in India and hopefully grow the small but burgeoning market. India’s spirits market was valued at $16.2 billion in 2006 at the retail level, but imports spirits accounted for less than 1%.
Melissa Earlam of UBS says Pernod has the highest exposure of spirits in India but Diageo leads imported Scotch with Johnnie Walker. We expect both companies along with Moet Hennessey, Beam Global and others to focus on increased exposure now that tariffs have lightened.
US trade officials say they are still deciding whether to continue a WTO court challenge against India’s hefty duties after the country raised basic customs on wines. The EU is also reportedly skeptical over the news. Both the US and the EU point out that the states could still raise taxes to make up the difference in the new national tariff.
Previously, the basic import duty on wine and spirits was 100% and 150%. As a part of its new plan, the Indian government raised the basic duty on wine to match spirits at 150%, which is still high but falls under WTO regulation. All in all, the change could benefit spirits exporters, but hurt the wine guys.
On the brighter side, the improved tax increases will keep US wine and spirits as an affordable luxury in India and hopefully grow the small but burgeoning market. India’s spirits market was valued at $16.2 billion in 2006 at the retail level, but imports spirits accounted for less than 1%.
Melissa Earlam of UBS says Pernod has the highest exposure of spirits in India but Diageo leads imported Scotch with Johnnie Walker. We expect both companies along with Moet Hennessey, Beam Global and others to focus on increased exposure now that tariffs have lightened.
US trade officials say they are still deciding whether to continue a WTO court challenge against India’s hefty duties after the country raised basic customs on wines. The EU is also reportedly skeptical over the news. Both the US and the EU point out that the states could still raise taxes to make up the difference in the new national tariff.
posted at 3:39 PM
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