The government is expected to lower the Customs duty on alcoholic beverages in the Budget. At present, the basic Customs duty is 150 per cent.
However, after factoring in the countervailing duty, the tariff ranges between 140 per cent for wine and beer (for 9-litre cases) with CIF value of over $40 and 525 per cent for liquor with CIF value of less than $10 (for 9-litre cases).
Government officials said the high Customs duty had resulted in imports through illegal means, which in turn caused a revenue loss.
According to the commerce ministry's estimates, of the scotch whiskey market estimated at over 1 million cases, about 65 per cent are counterfeit and sold by bootleggers. Also, a number of trading partners like the EU and US have demanded a reduction in the Customs duty on alcohol.
In its pre-Budget proposal, the commerce ministry has sought to halve the basic Customs duty on scotch whiskey to 75 per cent. It has also asked for an abolition of the additional Customs duty, which had been imposed in lieu of excise duty levied by states.
The additional Customs duty has been questioned as being incompatible with the provisions of the World Trade Organisation. Industry chambers, like the Confederation of Indian Industry, have also proposed a reduction in the basic Customs duty and the removal of state levies.
However, the Federation of Indian Chambers of Commerce and Industry is for continuing the 150 per cent basic Customs duty and the additional Customs duty for five years.
Ficci said a relaxation in the import of alcoholic beverages for hotels and restaurants under the Foreign Trade Policy had resulted in higher imports.
Import duties in India are considered high compared with those levied in other countries.
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