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Liquor imports to carry 150% basic duty

BS Corporate Bureau

The policy on liquor imports is finally clear. As per guidelines issued by the Director General Foreign Trade (DGFT), bottled imports which are on the open general licence (OGL) will attract a basic customs duty of 150 per cent. The government has also levied a three-tier graded additional customs duty on liquor imports.

As per the stipulation, a case worth $20 or less will have to pay an additional customs duty of 150 per cent, cases costing between $20-$40 will have to pay an additional duty of 100 per cent and cases more than $40 will attract a 75 per cent additional duty. The three effective rates of duty will thus be: 300 per cent, 250 per cent and 225 per cent, respectively.

Bottled liquor imports were earlier on the negative list but alcoholic concentrates could be imported at a duty of 224 per cent. The import restriction was removed in keeping with the government's commitment to the World Trade Organisation to phase out quantitative restrictions.

The general expectation in the domestic industry was that the government would peg the basic customs duty at 224 per cent (which was applied to alcoholic concentrates).

Incidentally, both the domestic and foreign companies have said that the policy can lead to a lot of junk stuff coming in while the internationally renowned brands will be out of reach for the consumer.

According to Amar Sinha, president Whyte and Mckay India Ltd, the removal of restrictions is just for names sake. "Prices for premium brands (which are the rated international brands) will be cost prohibitive," Sinha said. The duty structure will encourage grey market operations, he pointed out. However, he added, "We are optimistic that the duties will settle down to reasonable levels in a year's time."

Meanwhile, the domestic industry is happy that the government has incorporated its suggestion for a graded additional import duty structure to control the entry of cheap imports. However, L N Batra, secretary general, All India Distillers' Association (AIDA), pointed out that the duty reduction in basic customs duty by nearly 70 per cent reduces the relief to domestic manufacturers from cheap imports. "The government had time till 2005 to reduce basic customs duty to 150 per cent which is the WTO bound rate," he added.

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