Page last updated at 11:55 GMT, Monday, 22 September 2008 12:55 UK

EU renews India WTO drinks case

India earlier pledged to lift the restrictions on imported alcohol

The European Union (EU) is to reopen a complaint about India's wine and spirits duties at the World Trade Organization (WTO).

The challenge was suspended last July after India agreed to lift duties, which had been as much as 550% on imported alcohol such as French wine.

But the EU said that taxes remain high in some of India's largest markets for alcohol, including Goa and Maharashtra.

If the EU and India do not settle the matter soon a formal probe could start.

Both sides have 60 days during which to negotiate.

Despite agreeing to change the rules last year, local goods in the state of Maharashtra - where India's financial hub Mumbai is located - are exempt from excise duty while imported alcohol is taxed, said the EU.

And in Goa, a special duty applies to imported wines and spirits.

"In both cases internal taxes are applied only to imported wines and spirits, or at a much higher rate for imports than domestic goods," it said.

"This is a breach of the WTO's national treatment principle, which requires that WTO members treat imports and domestic goods the same."

This latest twist comes after the EU first made a complaint against India regarding alcohol import duties in December 2006.

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