Liquor industry urges caution on EU liquor tariff cuts

As India moves closer to finalising a Free Trade Agreement (FTA) with the European Union (EU), domestic alcoholic beverage manufacturers have urged the government to adopt a phased approach to lowering import duties on wines and spirits rather than implementing steep, immediate cuts.

In a letter addressed to the Commerce Ministry, the Confederation of Indian Alcoholic Beverage Companies (CIABC) recommended that the current import duty of 150  percent on bottled wines and spirits be reduced to 100 percent immediately, and gradually brought down to 50 percent over the next 10 years. For bulk wines, a similar duty reduction timeline has been proposed, while for bulk spirits, CIABC suggested a more aggressive cut — from 150 percent to 75 percent immediately, with further reductions to 25 percent over a decade.

CIABC’s recommendations echo the structure of India’s recently finalised FTA with the United Kingdom, under which tariffs on whiskey and gin were reduced from 150 percent  to 75 percent immediately, with a further decrease to 40% at the end of a 10-year period.

To protect the domestic industry, CIABC has called for the implementation of strict rules of origin and the establishment of minimum import price (MIP) thresholds. It flagged the issue of rampant under-invoicing of alcoholic beverages, with imported products entering the Indian market at unviably low CIF (cost, insurance, and freight) values, sometimes as low as $3 or less per 750ml bottle.

CIABC strongly recommended an MIP of $5 per 750ml bottle of wine — similar to the provision in India’s trade agreement with Australia — to qualify for any tariff concessions, along with an MIP of $6.70 per litre for bulk wines. Director General of CIABC, Anant S. Iyer, emphasised the urgent need for these safeguards to ensure that tariff relaxations under the proposed EU FTA do not lead to market distortions or undermine the interests of Indian alcobev producers.