The EU has finally lost its patience over India's import restrictions on wine and has filed a complaint with the Disputes Settlement Mechanism of the WTO which has been joined by the US.
Farm commissioner Marian Fischer Boel raised the issue on her recent visit to India. She said, 'These products are not staples and the European exporters have a legitimate interest in being able to supply the Indian market. Could we not leave it up to Indian consumers to decide when to buy domestically produced wines and spirits, and when to buy something else?'
The Indian wine industry claims that a reduction in tariffs would 'destroy' the emerging wine industry with a wave of cheap imports. Indian wine makers would prefer a staged reduction in duties, favouring higher quality imports.
An Indian red at, say, 950 rupees (£11.10) a bottle, can be a third of the cost of an Australian shiraz. The Indian Government's stance on import duties means that foreign access to the £930m alcoholic drinks market, growing at nearly 30 per cent a year, is severely curtailed. While India's basic import duties on wine and spirits are 100 per cent and 150 per cent respectively, federal and state taxes can push tariffs as high as 264 per cent and 550 per cent.
The EU has a fair chance of success at the WTO disputes settlement panel which has ruled against Japan, South Kore and Chile over discriminatory spirits taxation regimes. Getting into the Indian market could help drain the European wine lake and taking on a foreign country is a welcome distraction from attempts to reform the EU wine regime which are meeting substantial resistance, most recently from the European Parliament.