As the world's multi-nationals prepare for the removal of quantitive restrictions (QRs) in the Indian market, hopes of further liberalisation in line with WTO proposals in India suffered a blow last week.

The set back occurred when a senior government official was reported to say that WTO rules on tariff reductions would not have to be enforced immediately.

Under a WTO agreement member countries should not be allowed to provide tariff protection to domestic industries. While the basic customs duty on alcohol in India sits at 210%, the country's commitment to the WTO should mean that the level be slashed to 150%.

But a commerce official was quoted in Business Line as saying: "Although these items would have to be removed from the restricted list to the open general licence with effect from April 1st 2001, we retain the option to maintain the customs above the bound level until 2004."

The official admitted that there was pressure from multi-nationals to cut the import duties but claimed there was "technically no necessity to effect any reduction now".

The Business Line reported that the central government was under pressure from not only domestic manufacturers who wish to protect their local brands but also State governments who "do not favour any move that could impinge on sales of Indian made foreign liquor", for tax reasons.