Jul. 17 – According to the latest figures from the Scotch Whiskey Association, there was an impressive 30 percent increase in the volume of Scotch whiskey exports to India in the year 2011, compared to 2010.
The government of India has shown signs that it is willing to decrease duties from 150 percent to 40 percent on whiskies priced more than US$7 per liter and wines above US$4 per liter if the European Union gives more access to the Indian services industry and labor-intensive goods.
However, the duty cuts will be above the predetermined threshold levels to stay away from competition from the cheaply-priced varieties. Again, it all depends on India getting its due in the region of services, where it sees business opportunities in Europe, and receives greater access for its labor-intensive goods including textiles and leather.
The liquor companies from Europe will continue to be charged state taxes from 30 percent to more than 100 percent, but the frequency is less as the taxes are mostly applied on the landed price of alcohol in states. Most Indian state governments charge liquor companies based on the price of the goods when land in the states. Therefore, if import duties are reduced, state taxes will subsequently be going down as well.
Certain issues such as visas for professionals, recognition of India as a data-secure country, and the ease of the Indian government’s procurement rules need to settle down before India and the European Union sign the agreement.
Dezan Shira & Associates is a boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in India. For more information, please contact india@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.
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