The Indian government has indicated to the EU that the country needs to reform its tariff regime on imported spirits and wine, just-drinks understands.

Industry sources have told just-drinks that the Indian authorities have given a sign to EU officials that the country's high import taxes must be brought in line with its World Trade Organisation commitments.

The move follows discussions between the EU and India to broker a deal over the tax on beverage alcohol imports.

The EU believes India's tariffs unfairly penalise imports at the expense of domestically-produced wine and spirits.

The Scotch whisky industry, for example, has been a fierce critic of India's duty system, where a tax of up to 550% can be levied on a bottle of Scotch.

Brussels has threatened to push for WTO arbitration if India fails to meet the EU's demands, while the US and Australia have also asked for the WTO to intervene on the issue. The next Indian Budget will be announced on 28 February.

A spokesman for the UK-based Scotch Whisky Association, a vocal critic of India's tariff regime, said: "What is clear is that there is growing international pressure for India to take action. There have been false dawns before in India but what is different this time is that the (European) Commission has made it clear that this is the last opportunity for India to reform its fiscal regime."

However, the Indian government is likely to face pressure from players in its domestic spirits industry to maintain its strict tariff structure.