New Delhi, July 8:

The scrapping of additional customs duty (ACD) will be a boon to the overseas liquor industry and also our importers who will benefit from the increased sale due to an overnight price drop of up to 30 per cent in retail. But wine producers may not benefit uniformly. In fact, premium wine will paradoxically become more expensive.

The additional duty on liquor used to take the total import duty to as high as 550 per cent earlier. Now the customs duty will come down to 150 per cent (actually 164 per cent, including some residual special duties), resulting in a significant drop — of up to 30 per cent or more — in the retail price of whiskies, vodkas and other liquor.

Beer will share similar benefits, as the basic duty remains unchanged at 100 per cent. Wine on the other hand may suffer as the basic duty has been increased from 100 per cent to 150 per cent, which is within the agreed outside limit of the WTO. The more expensive premium wines, which also attracted 100 per cent basic duty but only 20 per cent ACD, compared to 75 per cent ACD on the cheaper wine (under $25 a case), may become costlier.

It should have been a matter of common sense to keep beer and wine in the same category due to their lower alcohol content even though wine has more health benefits, proven consistently by several neutral, multinational scientific studies. Apparently, due to pressure from the local industry the duty on wine has been raised to the maximum of 150 per cent.