The Soap Opera Continues

Unless you are in the industry (or a lawyer), you likely do not share my morbid fascination with the ongoing pissing match between India and the world's alcohol producers.

Although we focus on whisk(e)y here, it may not surprise you that I am a fan of all things fermented and/or subsequently distilled. And although I have many friends who hail from that exotic sub-continent and I love me some Indian culture - in a gang fight I'm going to side with alcohol.

Make no mistake, this issue with discriminatory taxes goes far beyond Scotch whisky - it's a punitive tax on all alcohols that are non-Indian. This is not a sin-tax - it's a protectionist-tax.

Come on kids, learn from those crazy Soviets - 1. Protectionism doesn't work. 2. Free-market economies shall prevail. And most importantly 3. People want access to alcohol. Those three market forces alone say "Put away your dicks and do the right thing."

Of course this is all for show. As soon as Mallya completes his acquisition of Whyte & Mackay, the ice will mysteriously begin to break; the Indian gov't will decide to re-examine their position - all so Mallya can more easily import the (soon-to-be-Indian-owned) Whyte & Mackay products. Now, if there is a way to keep some of the taxes in place - while letting W&M in at a different rate, I'm sure they will figure out a way to do so. Am I alluding to some level of political corruption within foreign governments? Of course not - (plus who am I to cast aspersions? - I live in the US). I'm just sayin'...

Want to read more of my incoherent ramblings on the "Indian Situation"? Of course you do:

Just because you keep saying it, it doesn't make it true... (May 2006)

The Issue with Tariffs (June 2006)

SWA + EU + WTO vs. India (August 2006)

Indian Ownership? (August 2006)

WTO to deal with India (November 2006)

You can also read the latest salvo (in the form of yet another press release) from the SWA:

SWA welcomes EU request for WTO ruling on tax discrimination in India

The Scotch Whisky Association (SWA) has welcomed the decision of the European Union to
seek the establishment of a WTO dispute settlement panel to rule on India's discriminatory tax
regime for imported spirits and wines. The EU has asked that its request be considered by the
WTO at a meeting on 11 April.

The request follows an EU investigation that found the Indian fiscal regime for imported spirits
and wines to be in 'blatant violation' of WTO rules and unfairly distorting competition. Of
particular concern to Scotch Whisky distillers is the 'Additional Duty', which is levied on imports in
a discriminatory manner and protects domestic producers contrary to WTO rules. When the high
'Basic Customs Duty' is added, imported spirits face an overall tariff burden of up to 550%.
Gavin Hewitt, the SWA Chief Executive, said:

"Scotch Whisky distillers have long campaigned for fair access to India. The EU's decision is welcome and sends a clear message to India that it must act now to reform its tax regime or face a dispute panel. We hope the Government of India will seize the opportunity and move to reform the system in the coming days in line with international rules."

In a statement, Peter Mandelson, the EU Trade Commissioner, said:

"India has maintained extremely high duties on imported spirits and wines for many years. They restrict European exports and are in clear breach of WTO rules. As we could not resolve our dispute in consultations, the EU sees no other way than to request the establishment of a WTO panel. We are of course not closing the door to an amicable solution - but the ball is now in India's court."