The head of India's UB Group has warned that the ongoing struggle against higher taxes on imported spirits into the country cannot be resolved through the World Trade Organisation.

Last year, the Indian government abolished the additional duty levied on imported spirits, although individual states in the country have since introduced their own taxes on spirits from abroad. Paul Walsh, Diageo's CEO and current chairman of the Scotch Whisky Association, warned earlier this week that if non-discriminatory tax treatment for domestic and imported products were not introduced by the Indian states, "the industry will not hesitate to return to the WTO".

Speaking at the World Whiskies Conference in Scotland on Tuesday (15 April), however, Vijay Mallya, the head of UB Group, said that the WTO would not be able to influence the situation in the country.

"One of the directive principals enshrined in the Indian constitution is that the Government shall endeavour to introduce nationwide prohibition," Mallya said. "The same constitution of India also empowers every state government to tax, licence, restrict or permit the manufacture, distribution and sale of beverage alcohol in any manner of their choosing, over which the Indian federal government has absolutely no control. This is a constitutional provision."

Whilst this may not be in compliance with WTO regulations, Mallya said he "would like someone to tell me that the World Trade Organisation overrules the sovereign constitution of a nation.

"Yes, the Scotch whisky business lobbied hard and persuaded the Indian government to remove the additional customs duty and coming into line with WTO obligations," Mallya continued. "But those obligations start and end with the federal government of India. They do not apply to the state governments, who are constitutionally empowered.

"Be aware that it is not a simple open and shut case, where governments can be asked to fall in line with international duty structures. That is something that is not challengeable in any international court."