What did I say?
If there was a way for India to reduce import tariffs on holdings of Indian Companies (i.e., Whyte & Mackay) while figuring out a way to retain restrictive protectionist tariffs on other imports, they would.
And apparently they did.
Today (Sunday) William Lyons reports in "Scotland on Sunday" that just days after the India Government talked about removing the protectionist national tariffs, they introduced a way for each of the 28 states to implement their OWN protectionist tariffs.
But I fully expected something like this. And I told you so.
From the Scotland on Sunday Article:
Under the terms of the Indian constitution, the central government
delegates tax-raising powers on imported goods to a state level.
Technically the states are being encouraged to abide by the
government's World Trade Organisation commitments and levy the same
excise duty on imported goods as they levy on domestic alcohol
products.
But sources in India say that state duties could increase by a
similar amount to the reduction in central government duties which
could mean a state levy of up to 150% - effectively neutralising the
national government tax cuts.
Last night one Indian based source said: "It is possible that the
state duties will increase by a similar amount to the reduction in
central government duties as this has happened in the past. I am
therefore not yet chilling the champagne."
Any move by the states to implement such a punitive tax would likely
to be frowned upon by the WTO disputes panel, which has the backing of
the EU, the US, Japan, Chile and Australia.
Read the whole article here.
UPDATE: July 16, 2007
According to a source involved in the talks the recent articles in The Scotsman are not entirely accurate.
What
the EU and US have been campaigning for are non-discriminatory tax
treatment for imported alcohol. As far as they are concerned, The India
government has delivered this and all liquor imports should now be
treated equally with domestic spirits on a tax basis.
The
government is indeed in the midst of changing legislation to allow the
individual states to set their own taxes on imported liquors, but the
agreement stipulates that the Government will ensure that these import
taxes are in line with taxes on domestic liquors.
The EU has
already moved to have the WTO dispute panel on this issue, so sure are
they that there is no longer an issue - they are confident that a
level-playing field has been achieved.
http://ec.europa.eu/trade/issues/respectrules/dispute/pr160707_en.htm
Because of the state
control, the price of alcohol may actually go up in some states, while
hopefully, in others it will be reduced.
The basic Indian
customs duty of 150% is still very high by international standards, and
the world market hopes that this level is reduced in the foreseeable
future.
