Dinesh Jain, managing director of Highland Distillers, India & Area Countries has called the proposed reduction in India's basic customs duty on alcohol a welcome step. But, he said, it was still "not satisfactory".

"The current levels are higher than what was applicable three years ago. Also, the current levels are still one of the highest in the world," he said.

The proposals for the budget 2003-04 were announced at the end of last week and will see the basic customs duty rate lowered from 182 to 166% as per India's WTO commitments. But additional duties for spirits under $10 a case are 150%. For those between $10 and $20 they are set at 100% or $40, whichever is higher. Additional duty for cases over $20 but below $40 will be 50% or $53.20, whichever is higher. And duty on cases over $40 will be 25% or $53.20, whichever is higher.

Dinesh Jain said he was "disappointed at the very high additional duty levels that make the products prohibitively expensive. The reduction in end consumer prices will actually be higher for Scotches especially since the Rupee has depreciated against the GB Pound by more than 11% in the last year.

"This step is clearly protectionism at unduly high levels that is unwarranted."

He warned that the high levels of duty will benefit nobody but those operatinfg on the balck market.