New Delhi, Dec 7 (KNN) The European Union’s (EU) spirits industry is persisting for reducing India's import tariff by 50 per cent in the free trade discussions, reported Mint citing a top EU liquor industry executive.

According to Pauline Bastidon, director of trade & economic affairs at spiritsEUROPE, the share of European spirits in the Indian market was a mere 2.5 per cent of the total alcohol market of 385 million cases in 2022. At present, India levies 150 per cent tariff on imported liquor.

Bastidon suggested that negotiators in India-EU free trade agreement (FTA) talks should address regulatory issues at federal and state levels since alcohol is a state subject in India.

As per reports, the spiritsEUROPE has also demanded protection of intellectual property (IP) and geographic indication (GI) rights for its products in the proposed FTA with India. GI rights refers to protection of the geographical origin of the product, such as Scotch in the case of whiskey, from false claims to the attributes of that region.

"In India, there will be growth. But on both sides, trade relations will see a real pickup if India and the EU agree on an FTA favourable for both sides. So, there should probably be two scenarios. Without FTA, the growth will probably be a lot more moderate. And with an FTA, the trade ties will be much closer, and the growth will be higher," Bastidon said.

Vinod Giri, director-general, Confederation of Indian Alcoholic Beverage Companies (CIABC), questioned the EU's intent.

“Pointing to the ongoing trade talks between India and the UK, he, said, "There is close geographical proximity, low transport costs, and a tax-free trade relationship between EU and the UK. Considering that, there is no reason why India relationship between EU and the UK. Considering that, there is no reason why India should offer the EU a trade deals any different from the UK on tariffs, non-tariff measures, exclusions, and product specific rules."

The seventh round of consultations for the India-EU FTA is scheduled to begin next January. Excise duty on alcohol is an easy source of tax revenue to states, and so the taxes are high. Karnataka levies the highest tax on liquor at 83 per cent followed by Maharashtra (71 per cent) and Telangana (68 per cent). Haryana and Goa have the lowest excise duties on alcohol at 47 per cent and 49 per cent. Of course, states like Gujarat, Bihar, Nagaland and Mizoram prohibit consumption of alcohol.

The EU liquor trade is concentrated in premium spirits such as vodka, gin, etc., which are at the bottom of India's alcohol consumption chart as brown liquor (such as whisky, brandy, etc.) is consumed more in India.

(KNN Bureau)