INDIA: Budget fails to lift spirits of industry
The Indian government's decision to cut the basic import duty on spirits and wines from 210% to 182% has been met with little joy by the industry.
The drinks industry still believes the cut will do little eto help their business or combat the black market.
In a statement released to just-drinks Dinesh Jain, managing director of India & Area Countries, Highland Distillers said: "Duty relief on BIO (bottled in Origin) liquor is a welcome step. However, it is only a very small step. The impact of duty reduction from 210% to 182% is likely to result in a final price reduction of only about 10-12%, especially for the premium brands like "The Famous Grouse".
"The issue of double taxation of Special Additional Duty as well as State Taxes on imported liquor has not been referred and one will need to see the fine print. This is, in any case, a violation of WTO agreement and (I) hope that this has been resolved."
He went on: "Limited lesson seems to have been learnt from last year's experience where official imports shrank after duty increase and the only beneficiaries were bootleggers. At the proposed duty levels, there is, all the incentive for unscrupulous operators to benefit from high duty levels."
Meanwhile Deepak Roy Guiness UDV president for South Asia, Russia and Baltics told Reuters: "While this is a step in the right direction, it will have no real impact on the demand for imported spirits."
"We expected the additional duty to be waived entirely," he said.
Apart from the basic duty of 210% and a special additional duty of 4%, liquor importers paid an additional import duty of 150%, 100% and 75%, depending on the price of the spirits imported.
This year's budget cut the additional duty for imported spirits costing less than $25 to 75% and 50% for those priced over $25.
A powerful industry lobby group, consisting of many of the world's top drinks companies had argued for the total scrapping of the additional duty altogether. But the government said that the duty was enforced because domestic firms paid a state excise duty from which foreign companies' imported bottled spirits were exempt.
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