Having exhausted its powers to block a World Trade Organization probe into high import duties on wine and spirits, India is likely to slash the rates through a new law to resolve the issue with the European Union and the US.
India blocked the formation of a WTO dispute settlement panel on Tuesday on a complaint from the European Union, but it cannot do so again when a new investigation is launched.
"The issue will again come up before the dispute settlement body within the next three weeks, probably on April 24 or April 26 and the panel will be set up to investigate high duties.
"But as the process will take time, the government expects to get a Bill passed in Parliament to reduce duties before the verdict is delivered," an official said.
The dispute settlement mechanism at WTO takes about a year to complete without appeal. In case an appeal is made it takes three more months.
Apart from the EU, the US has complained against India at the WTO on high duties on imported wines and spirits. Realising its WTO obligations, the government has already drafted a Bill to scrap extra customs duty on wines and spirits.
At present, the country imposes a basic customs duty of 100-150 per cent and additional customs duty of up to 150 per cent on wines and spirits.
The total incidence of tax is between 250-550 per cent, depending on the import price. The proposed legislation would retain the basic duty but abolish the ACD.
However, it will also empower states to impose an extra levy equivalent to the excise on domestic wines and spirits. This will bring imported and domestic products on an equal footing, the sources said.