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Scotch industry hails duty cut; eyes India

business Updated: Jul 04, 2007 12:53 IST
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The influential Scotch Whisky Association (SWA) has welcomed reports that India has withdrawn the additional customs duty on imported wines and spirits, and said it was "good news" for Indian consumers as well.

For six years, the SWA has been campaigning at various levels with the British and Indian governments as well as the European Union, United States and the WTO for reduction of India's high import duties. The duties were seen as a major hurdle by Scotch whisky exporters who were keen to enter the vast Indian market for spirits and wines. After protracted negotiations with the Indian government failed, industry groups approached the WTO for dispute resolution.

Tuesday's announcement in New Delhi of withdrawal of the additional customs duty is seen as part of an effort to resolve the dispute with the European Union and other leading trading partners over high duties on these items.

David Williamson, spokesman of the SWA, told IANS: "We are awaiting confirmation of the announcement in New Delhi, but the removal of the duty will be widely welcomed. It is a step towards market access and fair competition".

According to SWA figures, sales reached record levels last year when exports rose by 4 per cent to 2.5 billion pounds, which overtook the previous high of 2.4 billion pounds in 1997. The volume of shipments also rose by 6 per cent on the previous year to more than one billion bottles.

Richard Burrows, SWA chairman, declared: "Building on a record year in 2006, the prospects for Scotch whisky are brighter than they have been for many years. I'm greatly encouraged that distillers, large and small, are investing in facilities in Scotland and taking advantage of opportunities worldwide, with markets in Asia, North and South America offering strong potential for growth."

The Scotch industry sees India and China as major markets for growth. The demand for imported spirits in India is high as its burgeoning economy increases the size of its middle class exponentially every year.

China is a massive emerging market with an expanding middle class of over 200 million that is now developing a taste for Scotch. In the past 10 years sales have risen from 700,000 litres to 5.7 million, as China has steadily reduced import tax from 65 per cent to 10 per cent.

But the Indian market is considered more lucrative and may well be the largest market for spirits in the world. India reportedly consumes over 120 million cases of spirits each year, the vast majority of which are locally produced.

According to industry estimates, after Tuesday's withdrawal of duty, exports to India are expected to jump from 750,000 cases to 20 million cases.

Reports from India quoted a finance ministry statement that the government had decided to withdraw the additional customs duty on imported wines, spirits and liquor after discussing the issue with state governments.

But the government raised the basic customs duty on wines from 100 per cent to 150 per cent, as permitted by the World Trade Organisation, a rate which will continue to apply to spirits and liquors.

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