The World Trade Organisation has agreed to an EU request to take a closer look at India's taxation of spirits and wines.

The WTO said yesterday (24 April) that it will establish a dispute settlement panel to rule on whether India's excise tariffs on alcohol imports are illegal. The move follows a request by the EU last month that the organisation consider its demands at a meeting earlier this month.

Speaking to just-drinks, a spokesperson for the Scotch Whisky Association said: "We welcome the EU's determination to secure a level tax playing field for imported spirits and wines in India. Referral to a WTO panel is a very important step forward in the Scotch whisky industry's campaign for fair access to the Indian market."

A ruling from the panel is expected within the next 12 months.

The EU has been in talks with the Indian government in recent months about the country's tax structure. In February, India refused to reform the structure when it unveiled its annual budget.

The SWA believes Indian duty on imported spirits is a "blatant violation" of WTO rules and unfairly discriminates against Scotch whisky and other spirits. A bottle of Scotch, for example, can be hit with a tax of up to 550% under the Indian tax regime.

Indian distillers, however, have claimed the EU is being unfair in threatening WTO action in order to win equal treatment for imported spirits in India. The All-India Distillers Association has accused the EU of "double-speak" because under EU law, Indian whisky made from molasses cannot use the word 'whisky' on its products on sale in the EU. Any products on sale must be labelled with the term 'spirit drink' or 'Indian spirit drink'.