DISCUS

U.S. Decision to Challenge India's Discriminatory Liquor Tariffs Applauded by Distilled Spirits Council

May 24, 2007 08:00 PM

Washington, D.C. – A U.S. Government decision to challenge India’s discriminatory liquor tariffs through a World Trade Organization (WTO) dispute settlement panel was applauded today by the Distilled Spirits Council.

“The Distilled Spirits Council strongly supports the Administration’s decision to seek a WTO dispute settlement panel,” said Deborah Lamb, the Council’s Senior Vice President for International Trade.  “It is time for India to eliminate its WTO-incompatible practices and dismantle the web of additional duties and charges that unfairly blocks American spirits exports.”

“India’s exorbitant tariffs have made it nearly impossible for U.S. products—primarily Bourbon and Tennessee Whiskey—to break into this market, one of the largest spirits markets in the world,” Lamb said.

The Indian spirits market is valued at about $14.2 billion at the retail level, Lamb noted. Imported spirits account for less than one percent of the Indian market.  U.S. spirits exports to India in 2006 were valued at only $540,000 (FAS value).

India’s basic import tariff—150% on bottled imported spirits—is also its “bound” rate.  In WTO jargon, this means that India cannot exceed that rate without violating its WTO commitments.  However, since 2001, India also has applied additional customs duties on imported spirits.  Today, the additional customs duties on imported spirits range from 25% to 150%, depending on the per-case price of the imports.  These additional duties are assessed on top of the import tariff.  To that amount is added a 4% import surcharge in the form of an “extra additional duty,” yielding effective tariff rates ranging from 225% to 550%.

“We strongly support the U.S. Trade Representative’s initiative and look forward to working with them as the dispute settlement panel progresses,” Lamb concluded.

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