Sales of Scotch whisky dwindle in India

Published: 23 July, 2008

A 200% tax imposed by Maharashtra - the world's largest whisky market - has frozen sales of Scotch Whisky.

The industry has been campaigning for the tax to be cut to a more reasonable level.

In a meeting last week, leading whisky producers Diageo and Brown-Forman, the maker of Jack Daniels, persuaded the Maharashtra Excise Commissioner to put the new tax under review.

But that evening, he was transferred to a new role with the Maharashtra Government, leaving the companies clueless as to whether any real progress was made.

Mehndiratta said: "As an industry none of us really know how to take it. We've done good work with the Commissioner and we're not sure if we're going to have to completely reinvent the wheel."

Scottish whisky producers still expect to see their sales to India increase dramatically in the coming years.

Under heavy pressure from the World Trade Organisation, India reduced national tariffs on imported spirits to a flat rate of 150% at the start of July. Previously, the combined tax burden on imported spirits was often as high as 550%.

Maharashtra is the only state to have retaliated with higher taxes.

Excise bodies regulating taxes in all other states, including the major whisky-drinking areas Delhi, Bangalore and the Punjab, have opted to leave taxes on imported spirits unchanged.

Spirits importers argue that Maharashtra's new 200% tax on imported whisky plays into the hands of bootleggers. A bottle of Johnny Walker that costs around 1,800 rupees (22) for a litre on the streets costs 4,000 rupees (49) for just 75cl in the shops.

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