The World Trade Organisation has rejected a US complaint that Indian import duties unfairly discriminate against products such as wine and spirits.

India’s basic import duties on wine, which stood at about 100%, are within WTO limits.

But government surcharges raised tariffs to levels reaching as high as 550% in some Indian states. In Tamil Nadu, punitive taxes shut out foreign alcohol altogether, allowing shops to sell only Indian-made spirits and wines.

After objections lodged with the WTO by the US and the EU, the Indian government took action last summer to lift the extra duties on foreign wine.

At the same time the government announced it would raise basic wine duty to 150%, which is still within WTO limits.

Brussels dropped its complaint after the WTO panel decision this week, but the US maintains its case that Indian tariffs are discriminatory. It is backed by the Wine Institute, the main US wine industry advocate.

‘We are disappointed with the news, but we do not want to make any comment until we see the USTR [US Trade Representative] or WTO reports,’ Wine Institute communications manager Gladys Horiuchi told decanter.com.

India is considered an important emerging market for wine – the Wine Institute obtained a US$50,000 grant from the US government in October 2007 to study the market – but high tariffs ‘have suppressed sales there to date,’ according to a Wine Institute press release last year.

‘We do really very little business there, but it certainly is a huge economy, and we would love to expand the market share for Napa Valley wines,’ said Terry Hall, at the Napa Valley Vintners Association.

Written by Panos Kakaviatos, and agencies