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Last Updated: Wednesday, 4 July 2007, 18:58 GMT 19:58 UK
Whisky joy as India drops duties
India is the world's largest market for whisky
The Scotch Whisky Association (SWA) has welcomed an end to massive taxes imposed by the Indian government on imported wines and spirits.

The World Trade Organisation (WTO) had ruled that the duties of up to 550% on whisky were discriminatory and illegal.

India's decision to relent on the "additional duties" follows a European Commission complaint to the WTO that New Delhi was flouting the ruling.

The SWA said the move would open up new markets for European producers.

Even removing the so-called "additional duty" leaves wine and spirits exporters from Europe facing a "basic customs duty" in India of 150%.

But SWA chief executive Gavin Hewitt said: "Abolition of the discriminatory additional duty is a significant step towards fair competition in an important emerging market for Scotch whisky.

"The SWA has long campaigned for reform as the duty has unfairly restricted market access in contravention of WTO rules."

Free access

He said the Scotch whisky market in India would not transform overnight but there would be new possibilities for Scottish distillers to compete with domestic producers on a level playing field.

Pressure has been mounting on the Indian government to change its tax regime - not least because Indian spirits have free access to the European market.

An European Union report last summer said Indian taxes were excessively higher than rates imposed on local produce - so high that "the Indian market has remained essentially closed for imported wines and spirits."

India is the biggest spirits market in the world.

At the moment Scotch whisky accounts for less than 1% of the whisky sold in India but the lower tax regime should allow sales to quadruple in the next five years.

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