THE Delhi government is planning to slap a punitive new tax on Scotch whisky, the biggest threat yet to distillers' plans to take a greater slice of the world's biggest market.
The government has yet to announce the full details, but industry sources say it plans to impose an additional 30% tax on bottles of imported liquor.
It will be a huge blow to producers, undoing the benefits of the victory they won against Indi
a's obstructive tax regime last year. Delhi consumes almost 40% of India's whisky, making it the country's largest single market.
India slashed taxes on imported spirits last June under pressure from the World Trade Organisation.
Ashwin Deo, India managing director of Moet Hennessey, which produces Glenmorangie, said: "This will bring up the price of imported spirits back to where it was. Prices had gone down a bit, maybe 10%-15%, now it will be back up again to the same, maybe 5%-10% higher."
The additional tax will take the price of a bottle of Johnnie Walker Black Label in Delhi from Rs2,190 (£27) to Rs 2,847 (£35). The industry has already moved to block the tax, holding tense meetings with the Delhi government's excise department in the middle of March.
A source from the International Spirits and Wines association of India, which represents importers, said importers' concerns had been listened to, but that they had been given no assurances that the plan would be shelved.
India's powerful indigenous whisky producers have long been lobbying to prevent Scottish producers from increasing their share of the market.
A month after India slashed its duties last June, the state of Maharashtra, home of Mumbai, India's most populous city, loaded on a 200% state-level tax.
Under pressure from importers, this has since been replaced by a tiered system, which the Scotch Whisky Association is presently examining to see if it complies with World Trade Organisation rules.
Indian beer and spirits tycoon Vijay Mallya bought Whyte & Mackay last May and has already launched its Jura single malt and blended whiskies in India. Whisky accounts for most of the 100 million cases of spirits which are consumed each year in India. But high taxes mean that Scotch has captured less than 1% of the market.
In 2005, India ranked 16th in Scotland's whisky export markets, behind other emerging markets such as China and Brazil.
The full article contains 404 words and appears in Scotland On Sunday newspaper.
