New Delhi, March 7:

India said on Wednesday it expected a quick solution to a major row with the European Union and the United States over alcohol duties ranging as high as 550 per cent.

The statement came after the European Union threatened to haul India before a World Trade Organisation arbitration panel and the United States filed a formal complaint with the global trade body over the duties.

India, home to 1.1 billion people and a fast growing middle class, represents a huge market for both European and US wine and spirits exporters.

“I’m hopeful that by very quick negotiations we will find a solution very soon,” Commerce Minister Kamal Nath told reporters in New Delhi. “The matter is being discussed at the very highest level in the government of India,” he added, but did not say when a resolution might be reached.

Combined duties and taxes are as high as 550 per cent on imported spirits and as much as 264 per cent on imported wine, according to an EU report. India had promised the WTO its tariffs on wine and spirits would not exceed 150 per cent.

“I’m hopeful we won’t have to go to dispute settlement,” Nath said. “I’m hopeful it (the dispute) won’t have to reach any stage beyond where it is now.” The EU warned on Tuesday it might bring India before a disputes settlement panel at the WTO over what it regards as discriminatory barriers to European wine and spirits exports.

The EU began formal consultations with India at the WTO on the issue late last year. Consultations are the first step towards resolving a dispute at the global trade body.

The United States on Tuesday asked to begin dispute consultations with India over its alcohol duties at the WTO.

If the dispute is not settled by consultation, it can be referred to a WTO settlement panel. If the panel ruled against India, it could impose retaliatory duties on Indian imports.

European Union Agriculture Commissioner Mariann Fischer Boel told a news conference in New Delhi on Tuesday she was “very disappointed” that India’s annual budget announced last week did not touch the duties.

“European exporters have a legitimate interest in being able to supply the Indian market,” said Fischer Boel, who is on a week-long visit to India. However, Nath said on Wednesday duty changes “can also happen outside the budget.”