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States may foil Scotch majors’ party with extra duty

Scotch and wine firms may have to scale down their ambitious growth plans as some states are planning to levy additional excise duty on imported spirits, reports Lalatendu Mishra.
Hindustan Times | By Lalatendu Mishra, Mumbai
UPDATED ON JUL 16, 2007 12:04 AM IST

Scotch and wine companies may have to scale down their ambitious growth plans in India as some states are planning to levy additional excise duty on imported spirits. This is to negate the withdrawal of the additional Customs duty by the Centre following pressure from the EU and the US at the World Trade Organisation.

The Centre’s move had fuelled hopes of cheaper foreign liquor brands. Estimates show that 90 per cent of the 600,000 cases of imported spirits sold in India is bootlegged. Affordable prices could have logged huge volumes in the books of multinational liquor companies with a presence here, officials said.

Maharashtra has taken the lead by levying an ad valorem special fee of 200 per cent on the assessed value of imported Scotch and 150 per cent on imported wines. A notification to this effect has been issued. Once applicable on the new batches, Scotch whisky prices will go up by 10-15 per cent and imported wine will be 25 per cent costlier in the state.

“The duty has been revised to provide a level playing field for domestic manufactures,” said Maharashtra State Excise Commissioner Ramanath Jha.

Liquor industry analysts expect most states will follow Maharashtra’s lead.

The International Spirits & Wines Association (ISWA) has hit out at Maharashtra, stating that this is a retrograde move. “More imported liquor will be sourced from bootleggers and the state will lose revenue,” said Amrit Kiran Singh, chairman, ISWA.

But Vijay Rekhi, president of United Spirits, supported the state’s decision. “The state government has equated local spirit companies with the multinationals by applying an uniform duty structure,” he said.

The ISWA believes that the domestic spirits industry does not need any protection from multinationals.

“Ninety per cent of the spirits sold in India are below Rs 300 a bottle, while foreign brands are priced above Rs 1,000 at different price points. Around 80 per cent of the imported spirits is whisky and the price differential is huge. Where is the question of protecting domestic industry?” Singh said.

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