The European Union has suspended its complaint to the World Trade Organization (WTO) about India's import tariffs on beer, wine and spirits.
India is one of the world's largest markets for alcohol
The move comes after India recently lifted duties, which hit as much as 550%, on imported alcohol including French wine and Scottish whisky.
However, the EU has expressed annoyance that India has chosen to raise its basic duty on wine from 100% to 150%.
It is unknown if the US, which made a similar WTO case, will follow suit.
The three member WTO panel investigating the EU's complaint can stay in place for up to a year while the complaint is suspended.
"The European Commission will now continue to monitor the situation on the ground to make sure that no new discriminations appear at state level," the Commission said in a statement.
The Indian Finance Ministry reduced its additional duties to between 20% and 75% on imported beer and wine and between 25% and 150% on imports of distilled spirits.
The raising of basic duty on wine to 150% is still within India's WTO limit.