News: India seeks dialogue to resolve EU alcohol row

(RTR 04/12/2006) New Delhi - India is hoping to resolve through dialogue a trade dispute with the European Union over high import tariffs, its commerce minister said on Monday after a meeting with his visiting French counterpart.

Last month, the European Commission said it was taking India to the World Trade Organisation (WTO) in a dispute over New Delhi's high duties and taxes on wine and spirit imports.

"The (French) minister has strongly raised the issue," Kamal Nath said at a joint news conference with Christine Lagarde. "I hope we will resolve this by dialogue and it won't have to reach the next stage of dispute settlement."

Consultations at the WTO can last for 60 days but if no agreement is reached, Europe's complaint could eventually lead to retaliatory tariffs being imposed by the EU on Indian exports.

A European Commission report this year, prompted by European producers of whisky and other spirits and wines, found "clear violations of WTO provisions" in some Indian states.

Duties and taxes combined amounted to as much as 550 percent on imported spirits and 264 percent on imported wines, the EU executive's report said.

In the state of Tamil Nadu only Indian-made spirits and wines may be sold through shops and other retail outlets, it said.

Indian trade officials have said the issue is difficult to resolve quickly because state governments are responsible for excise duties on alcohol under the country's federal set-up.

EU spirits exports to India in 2005 amounted to 43 million euros ($55 million), a tiny amount given the country's size, while wine exports stood at 7 million euros, the Centre for European Policy Studies said.