Page last updated at 08:46 GMT, Thursday, 26 June 2008 09:46 UK

No half measures for Scotch whisky

The whisky industry in Scotland is warning of tough action against India unless it relents on taxes and labelling. In her second article from Mumbai, Gillian Marles looks at the row over a brand name.

The whisky industry in Scotland is warning of tough action against India unless it relents on taxes and labelling.

Bagpiper whisky
The question of what makes a Scotch whisky is rumbling on
The Scotch Whisky Association (SWA) is challenging a ruling by the Supreme Court in Mumbai allowing whisky brewed in Bangalore to qualify as a "Scot".

The drink, called Peter Scot, is one of India's favourite tipples but the association said the name gives a misleading impression that it has Scottish connections.

The organisation is also fighting what it said were unfair taxes imposed by some Indian states on the cost of a bottle of Scotch.

India is the biggest spirits market in the world and whisky accounts for most of the 100 million cases which are consumed in the country each year.

Fewer than one million of these cases come from Scotland.

Gavin Hewitt, of the SWA in Edinburgh, said: "If we could get 5% of the market it could transform the industry."

At Diageo's new headquarters in the Lower Parel area of Mumbai, the company's chief executive in India, Asil Adif, is looking to the future.

He added: "India is a very young country. Every year 15 million new consumers are added to the legal drinking age.

"They like things which communicate status and refinement and Scotch in India does that."

In the Hard Rock Café in Mumbai, Danesh Shetty, said in the last five years trends had changed.

Danesh Shetty
Danesh Shetty said the knowledge of whisky was growing

"People really know now about the Scotch whisky world, and they are learning how to have a Scotch whisky," he added.

The price of a Scotch whisky is much higher. In Danesh's bar, a local whisky costs 150 Rupees (about £2), whereas a Scotch costs at least three times that.

So there is a lot at stake. That is why the Scotch Whisky Association is putting a large amount of effort and money into campaigning against taxes.

The industry won a considerable victory last year when, after pressure from the World Trade Organisation, India slashed taxes on Scotch, which had been as high as 550%. But local states then imposed their own tax on the drink.

The Scotch Whisky Association has said it will take the fight to the highest level.

It is asking the European Commission to seek consultation with India and if that does not work, the issue could be taken back to the World Trade Organisation.

Molasses brews

If the WTO finds in SWA's favour, Gavin Hewitt said Indian imports to the UK could be penalised: "You're allowed to put tariffs up against Indian goods equivalent to the damage that's being done to your product."

This dispute is running at the same time as the Scotch Whisky Association is challenging when a whisky can be called a Scot.

Most Indian whiskies are made from molasses and cannot be sold in the EU as whisky. Some brands give the impression they are from Scotland. The Bangalore-based UB group's Bagpiper whisky is the most popular spirit in India.

The Association is looking at ways it can challenge the Supreme Court ruling allowing Peter Scot to keep its name.

But there is no sign when this issue will be resolved. It has taken 20 years to get to this stage.

Indians enticed to tour Scotland
23 Jun 08 |  Scotland

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