News: Scotch industry eyes vast Indian market
(TNN 02/04/2006) London - India's annual budget for 2006-07 dampened the spirits of the Scotch industry here when no tax concessions were announced. But now the industry hopes that the European Union will intervene to ensure fair access to the country's large spirits market.
For some time the Scotch Whisky Association (SWA) has been lobbying with the Indian government to reduce the basic customs duty on the import of Scotch, but without success.
The SWA claims that the high import tariff on Scotch had given rise to a flourishing market in counterfeit products in India. Lowering the tariff would not only ensure that genuine Scotch reached consumers but also bring India's tax structure in line with WTO regulations.
According to the SWA, market access to India for Scotch whisky and other imported spirits is unfairly restricted by a discriminatory fiscal regime, which is contrary to international trade rules. The overall duty burden faced by Scotch whisky ranges from 212 percent to 525 percent, SWA says.
SWA sources confirmed that after the budget - considered "disappointing" within the industry - there has been no contact with the Indian government. The industry is waiting for a report by the EU on India's import regime as relevant to the spirits industry.
Europe's wine and spirits industry had reportedly lodged a complaint under the EU Trade Barrier Regulation procedure in July 2005, seeking a level playing field for European spirits manufacturers and Indian producers. The EU report is to be released in April.
David Williamson, senior SWA official, told IANS that after the EU report was released, the SWA would consider the option of persuading the EU to take India's allegedly discriminatory import regime to the WTO for dispute settlement.
Scotch industry sources here believe that one of the major opponents of moves to lower India's tariff is noted industrialist-politician Vijay Mallya, who has major interests in India's spirits industry.
Mallya has often criticised the SWA for allegedly preventing the sale of Indian whisky in Britain and Europe, while the SWA sees him as a major roadblock in securing access to India's spirits market.
Without naming him, the SWA said that after India's budget failed to announce any concessions: "Domestic interests appear to have outweighed international commitments and, as a result, market access continues to be unfairly restricted by a protectionist tariff and tax system."
The SWA refutes Mallya's charge on the ground that spirits produced by Mallya's companies do not meet EU definition of whisky - that it should be made from cereals and not molasses - and as such cannot be marketed in Europe as 'whisky'. The SWA had no objection if it were called 'spirits' instead of 'whisky'.
In line with traditional practice, the EU requires 'whisky' to be produced from cereals and aged for a minimum of three years, at a strength not less than 40 percent vol. All whisky produced or sold in the EU must be produced in line with the definition.
Williamson said: "The law aims to prevent consumer deception - consumers expect whisky to be cereals-based - and ensures fair competition in the spirits market. These are recognised objectives under WTO rules.
"In India, there are no mandatory definitions of spirit drinks and many Indian products labeled 'whisky' (and brandy and gin) are produced from molasses alcohol, and are not subject to a minimum ageing requirement.
"While a molasses-based product would not be recognised as 'whisky' by international consumers, this does not prevent such products being freely imported and sold in the EU. Such products can be sold provided they are appropriately labeled to avoid consumer confusion.
"A molasses-based product can, for example, be sold under the description 'spirit drink' or 'Indian Spirit Drink'. Indian products are already marketed in this way in Canada."
He added that the SWA welcomed the fact that Indian whiskies that complied with international standards could be and were being sold in the EU.
India represents one of the world's largest whisky markets, with the potential to sell 65-70 mn cases.
Every year, over two billion pounds worth of Scotch whisky is exported - equivalent of 70 pounds a second to the balance of trade - making the industry one of Britain's top five manufactured export earners.
For some time the Scotch Whisky Association (SWA) has been lobbying with the Indian government to reduce the basic customs duty on the import of Scotch, but without success.
The SWA claims that the high import tariff on Scotch had given rise to a flourishing market in counterfeit products in India. Lowering the tariff would not only ensure that genuine Scotch reached consumers but also bring India's tax structure in line with WTO regulations.
According to the SWA, market access to India for Scotch whisky and other imported spirits is unfairly restricted by a discriminatory fiscal regime, which is contrary to international trade rules. The overall duty burden faced by Scotch whisky ranges from 212 percent to 525 percent, SWA says.
SWA sources confirmed that after the budget - considered "disappointing" within the industry - there has been no contact with the Indian government. The industry is waiting for a report by the EU on India's import regime as relevant to the spirits industry.
Europe's wine and spirits industry had reportedly lodged a complaint under the EU Trade Barrier Regulation procedure in July 2005, seeking a level playing field for European spirits manufacturers and Indian producers. The EU report is to be released in April.
David Williamson, senior SWA official, told IANS that after the EU report was released, the SWA would consider the option of persuading the EU to take India's allegedly discriminatory import regime to the WTO for dispute settlement.
Scotch industry sources here believe that one of the major opponents of moves to lower India's tariff is noted industrialist-politician Vijay Mallya, who has major interests in India's spirits industry.
Mallya has often criticised the SWA for allegedly preventing the sale of Indian whisky in Britain and Europe, while the SWA sees him as a major roadblock in securing access to India's spirits market.
Without naming him, the SWA said that after India's budget failed to announce any concessions: "Domestic interests appear to have outweighed international commitments and, as a result, market access continues to be unfairly restricted by a protectionist tariff and tax system."
The SWA refutes Mallya's charge on the ground that spirits produced by Mallya's companies do not meet EU definition of whisky - that it should be made from cereals and not molasses - and as such cannot be marketed in Europe as 'whisky'. The SWA had no objection if it were called 'spirits' instead of 'whisky'.
In line with traditional practice, the EU requires 'whisky' to be produced from cereals and aged for a minimum of three years, at a strength not less than 40 percent vol. All whisky produced or sold in the EU must be produced in line with the definition.
Williamson said: "The law aims to prevent consumer deception - consumers expect whisky to be cereals-based - and ensures fair competition in the spirits market. These are recognised objectives under WTO rules.
"In India, there are no mandatory definitions of spirit drinks and many Indian products labeled 'whisky' (and brandy and gin) are produced from molasses alcohol, and are not subject to a minimum ageing requirement.
"While a molasses-based product would not be recognised as 'whisky' by international consumers, this does not prevent such products being freely imported and sold in the EU. Such products can be sold provided they are appropriately labeled to avoid consumer confusion.
"A molasses-based product can, for example, be sold under the description 'spirit drink' or 'Indian Spirit Drink'. Indian products are already marketed in this way in Canada."
He added that the SWA welcomed the fact that Indian whiskies that complied with international standards could be and were being sold in the EU.
India represents one of the world's largest whisky markets, with the potential to sell 65-70 mn cases.
Every year, over two billion pounds worth of Scotch whisky is exported - equivalent of 70 pounds a second to the balance of trade - making the industry one of Britain's top five manufactured export earners.
posted by InCar Group Press Room at 23:58
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