Customs duties on luxury goods may be cut: Kamal Nath

March 28th, 2008 - 8:58 pm ICT by admin  


New Delhi, March 28 (IANS) India will seek to rationalise its high customs duty on luxury goods but maintain a high tariff on imported wines and spirits due to “discrimination” against Indian liquor, union Commerce Minister Kamal Nath has said. “We have chosen not to reduce tax on imported wines and spirits because of the discrimination against selling Indian whisky in Europe on the basis that it was made from molasses and not malt,” the commerce minister said.

“Discussions are on and I am sure we will find a way out,” he told the Mint-Hindustan Times Luxury Conference, referring to the dispute against India in this area at the World Trade Organisation (WTO).

Kamal Nath agreed with comments from the audience that India could be losing money because of high tariff on imported luxury brands. “We recognise that if you go abroad and buy, it is a revenue loss for India,” he said.

“But we are working on both duties and countervailing duties.”

The commerce ministry, he said, had forwarded a proposal in this regard to the finance ministry. “We will continue to urge the finance minister for some rationalisation. If he does, then I see some reform.”

Speaking about foreign direct investment, the commerce minister said while there was no problem in allowing such equity inflows into single brand retail trade, the Indian industry was feeling threatened by this.

Speaking at the conference later, Commerce Secretary G.K. Pillai said India may allow 100 percent foreign equity in retail, but it could be a while before this happens, as the Indian industry has to be taken along.

“Today we permit 51 percent. In a few years, it could be 100 percent,” he said.

In a tone similar to Kamal Nath, Pillai, too, spoke about the possibility of reducing tariffs on luxury goods.

“I don’t think you need to worry too much. The market is becoming more and more open,” he said while participating in a session on “With a little help: What the industry needs from the government”.

His statement came in response from a demand by Armando Branchini, managing director of Italian brand Altagamma, for sharply reducing import duties on luxury goods.

“There are great opportunities in India. Sometimes we take two steps forward, one step backwards, one step sideways. That’s the way we are,” Pillai maintained, adding it was this that had insulated India from the US sub-prime crisis.

“Up to now, there has not been a single instance of anyone coming to us and saying our tariffs were not WTO-compatible. Come up with specific proposals and we will change the law,” he added to much applause from the audience.

“You have to tell us what value you are bringing to India. That’s the way to approach it,” Pillai maintained, implying a mere demand was not good enough.

With “The Mystique of Luxury” as the main theme, the third Mint-Hindustan Times Luxury Conference is focusing issues spanning fashion, hospitality, interiors, yachts, jets, gourmet cuisine and intellectual property rights.

Among the 400 international delegates are Mark Lee of Gucci, Andrea Perrone of Brioni, Vittorio Missoni of Missoni and Andrea Illy of Illy Caf

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