Level playing field in Scotch market

Withdrawal of the additional duty on imported spirits in July was a significant step towards fair competition in the spirits market.

It signals India's commitment to its international trade obligations, allowing the EU and India to focus on deepening an increasingly important trading relationship.

In recognition of the Indian Government's move, the SWA supported the EU's decision to suspend its WTO complaint.

Looking ahead, the key to improved consumer choice is that imported and domestic spirits are, in practice, able to compete on equal terms in market for the first time. The Indian Government understands this and will, we believe, implement legislation permitting EU states to apply a "countervailing duty" to bottled imports on a non-discriminatory basis.

The EU and international producers will be closely monitoring how individual EU states bring forward their new tax policies once this legislation is in place.

It was therefore disappointing that Maharashtra jumped the gun by immediately introducing a tax policy which works against imported spirits and it would be regrettable if state-level actions brought India back before the WTO on spirits taxation issues.

India's economic dynamism and an improving retail environment present increased opportunities to purchase the range of premium products, including Scotch whisky.

With the spirits market expanding at 10% a year, there is room for all distillers, both domestic and international, to grow. However, while tax reform presents new possibilities to compete on a more level playing field, the market will not be radically transformed overnight.

On this, the international evidence is clear. For example, despite much lower duties in China (10%), imported spirits represent less than 1% of the overall market.

Imported spirits are also still subject to the basic customs duty at 150%. This is much less than the inflated duty burden of up to 550% when the additional duty was applied but still very high by international standards.

The basic duty will be considered in the just launched EU-India Free Trade Agreement talks, and we hope early progress can be made to full tariff liberalisation.