Soon after P Chidambaram presented the Indian budget in Parliament, the Scottish Whisky Association rose up in arms against Indian tax system.
The Scottish Whisky Association (SWA) has urged the European Union to launch WTO dispute settlement proceedings against India at the earliest following the budget’s alleged failure to reform the discriminatory tax treatment of imported spirits. The CEO of the Association, Gavin Hewitt is leaving with the EU agriculture commissioner Mariann Fischer-Boel for Delhi to hold last-minute discussions.
Hewitt said the Budget was the last "opportunity for India to reform the tax system." That opportunity has been missed and “we are urging the EU to take the matter to a WTO panel at the earliest opportunity. India’s discriminatory tariff and tax regime for imported spirits must be reformed in line with the international trade rules.”
This alleged discrimination was also a factor in SWA’s objection to Vijay Mallya acquiring Whyte & Mackay.
The dispute has been going on for some time with the SWA insisting that Scotch Whisky was subjected a high and discriminatory tariff and tax burden of up to 550 per cent in India. “In contrast Indian spirit drinks can be imported into the EU tariff free,” David Williamson of SWA told HT.
He said the tax structure is very complicated. Basic custom duty is 150 per cent in the country but in the case of Scotch whisky with additional duty on the value of the product when it arrives in India the taxes make it rise up to 550 per cent. “It is supposed to be applied on imports at the rate of state tax on domestic spirits for them to be operating on level playing field. But there is discrimination, both duty and the state tax are imposed and thus the additional duty is much higher,” he claimed.
In November 2006 WTO asked EU to start consultations with India, aimed at the two sides negotiating to reach a settlement and settle the trade issue amicably. If the scheduled discussions in Delhi do not settle the issue, Williamson hinted that the SWA would urge the EU to immediately launch WTO settlement proceedings against India.