India delays probe of its tariffs on American liquor

Geneva, June 4:

India blocked a World Trade Organisation (WTO) investigation of its import duties on American wine and spirits today, temporarily delaying a US government complaint over allegations that Indian rules discriminate against products such as Napa Valley wine and Jack Daniel’s whiskey.

The Geneva-based trade referee is already reviewing a European legal challenge of wine and liquor restrictions in a number of Indian states. A second investigative panel examining Washington’s arguments will almost certainly be established at a meeting later this month of the WTO’s dispute settlement body.

Meanwhile, an industry lobby said that the government should permit foreign equity in retail trade only in a calibrated manner so that Indian firms can invest in the business and prevent the flight of domestic capital overseas.

“A revolution in the Indian retail sector is already underway and with the help of right policy changes it can bloom further and benefit consumers greatly,” said the Associated Chamber of Commerce and Industry of India (Assocham).

A calibrated entry of foreign players will give a breathing period to domestic companies to prepare and face competitors such as Wal-Mart for a share in the organised retail trade business, estimated to grow to $23 billion by 2010. Organised retailing is estimated at $7.5-$8 billion presently.

The chamber’s statement comes in the wake of the government’s intention to examine the current policy on foreign equity with the view of easing the existing caps in some sectors like retail trade. “The chamber’s blue-print on organised retail is influenced by its members from a cross-section of industry in domestic retailing that it surveyed on opening up of domestic retail to 100 per cent equity,” an Assocham statement said.

“The government should consult the stakeholders before any policy announcement is made,” chamber president Venugopal N Dhoot said, adding domestic players suffered infrastructure bottlenecks and prohibitive prices for retail space.

“A plethora of bureaucratic hurdles and high capital costs also place domestic retailing firms at a disadvantage against international players who have over the years placed efficient chains in order at a low capital cost.” The chamber said retailing was the biggest private industry in the world and one of the prime movers of an economy. It was also a major driver of development and accounted for 10 per cent of GDP in most countries.

The chamber felt that although the retail industry was expected to create over two million jobs by 2010, shortage of professionals will remain a big challenge in the future.

“To overcome this, retail management programmes and institutes should be set up that can train talented professionals to meet the requirement of the manpower so that the projections come true.”