The Scotch Whisky Association (SWA), is lodging formal complaints with the EU and WTO over India's 700% Import Duty on spirits announced in the last Budget (1st March).

SWA spokesman Tim Jackson said India is violating international trade agreements on five levels by imposing the tariffs on imported Scotch.

Under its commitment to the WTO, India is meant to reduce tariffs on imported spirits from 222% to 150% by 2004. However, while the Indian central government had lifted the long-term Quantitive Restrictions (QRs) on imported spirits, it actually increased the total tax levied on Scotch to 706%.

The SWA said it saw no signs that India was sticking to its WTO commitment.

"The Indian government is circumventing its WTO commitments to protect its domestic industry which has long been shielded from international competition," said Jackson.

The government's decision was taken to appease the powerful Indian brewing and spirits companies just before state elections in India. They argued the domestic industry would suffer on a level playing field with international competition, being unable to compete on packaging and marketing terms.

Supporters of a drop in taxes also fear the hike will increase the black market for foreign spirits.