In a letter to the ICRIER board and Minister of Commerce and Industry Piyush Goyal, the Confederation of Indian Alcoholic Beverage Companies (CIABC) alleged that before talks for a full agreement, called the Comprehensive Economic Cooperation Agreement (CECA), which was signed by Delhi situated at. The think tank took foreign funding for a research report on the wine sector in favor of Australia’s interests.
While the interim agreement signed in April is yet to be ratified, CECA talks are likely to begin. ICRIER in its report said that India should consider including bulk import of wines under concessional tariffs in CECA, as this would address the issue of inverted duty structure and generate more employment and manufacturing in the country.
Inverted duty structure is an economic term for the odd situation where bulk raw material imports are taxed higher than finished goods. This makes the domestic manufacturers using raw materials uncompetitive, as seen in the case of textiles.
In the interim free trade agreement, Australia agreed to allow duty-free wine imports from India and, in return, India agreed to a phased reduction in tariffs. India will charge 100% on wines of $5 and above with immediate effect and offer to bring it down to 50% over 10 years. The duty on bottles with a minimum import price of $15 will be reduced from 150% to 75% and subsequently to 25% over 10 years.
“I am aware of the credible reputation of ICRIER and therefore pains it to draw your attention to the use of the ICRIER platform to conduct partisan and motivated campaigns in favor of foreign interests and against Indian industry,” said Vinod Giri, Director General CIABC K, said in a letter reviewed by the Mint.
“Anyone knows that ICRIER receives significant amounts of funding from foreign governments and institutions. According to its website, ICRIER received 4.53 crores from the British High Commission in just three years ending March 2021. Since the British High Commission has a direct stake in the outcome of FTA discussions, it is even more important for ICRIER to maintain fairness beyond doubt with regard to the study and report. On matters relating to FTAs,” the CAIB said in the letter.
Responding to the allegations, the think tank said that “it is redundant to allege that ICRIER is acting at the behest of a particular group”.
“The allegations leveled by a CIABC functionary are unfortunate and baseless. ICRIER has no official role in the FTA talks between India and Australia. The only connection may be our two reports that are publicly available. Our report deals with a sensitive topic of international commerce and recommends further liberalization of cross-border trade in the wine sector. While the officeholder is free to pursue his own limited interest, our report has taken a holistic approach and has factored in the interest of producers, user industries, importers and consumers,” ICRIER said.
It added that “Our report only highlights existing barriers to business growth, possible solutions, and makes recommendations, which are non-binding. Further liberalization of trade will ultimately depend on negotiations between the two governments, where various factors will determine the outcome.”
There is a star cast of Indian economists associated with ICRIER, which includes Shankar Acharya, Anwarul Hoda, Deepak Gupta and Ashok Gulati. Its board of governors includes prominent business personalities Uday S Kotak, Kiran Mazumdar-Shaw and Pramod Bhasin. Its directors include the late IG Patel, an internationally renowned economist, and the late Ishar Judge Ahluwalia.
ICRIER said the allegation was baseless as it was the “Ministry of Commerce (MoC) who asked us to publish one study, while the second study was done in consultation with DPIIT (Department for Promotion of Industry and the Interior).” business) in terms of ease of doing business in the states.”
Giri said that the main argument of CIABC is that objective study from an established institution should be objective, fact based and should not be generalised. “The wine industry is fine with the deal with Australia. The deal envisages a 10-year horizon (reduction in duty on imported liquor), and there are no concerns,” Giri said in an interview.
ICRIER has published two reports on the alcoholic beverage industry- India Australia Liberalization of Liquor Trade under CECA, which was released by Indian High Commissioner to Australia Manpreet Vohra and Australia’s Deputy High Commissioner to India Sarah Storey, and for Regulation of Alcohol Development of principles beverages.
One of the reports pointed out that the higher price cap agreed under the interim agreement would benefit only high-income Indian consumers, excluding middle-class buyers and the Indian hotel and tourism industry, highlighting the scope for further liberalization of tariffs in wines. Gone. and removal of non-tariff barriers under the full India-Australia Comprehensive Agreement.
“A draft copy of our report was shared with the MoC official involved in the India-Australia trade discussion. Apart from MoC, officials from Ministry of Food Processing Industries and Ministry of Finance (Customs) as well as experts from NITI Aayog were also consulted during preparation of these reports. All the stakeholders are fully aware of our recommendations.”
The Ministry of Commerce and Industry said that the IndAus ECTA agreement was signed after extensive consultations with several industry bodies (national and product-specific bodies), industrialists, experts, economists, consultants, various government departments and relevant ministries.
“CIABC, among others in its area, was in regular touch with the government. The positive response to the IndAus ECTA agreement has been widely reported in the media, including in your newsletter. Negotiations for a final agreement have not started, and writing about it is absolutely illogical and wildly speculative,” said a commerce ministry spokesperson.
Queries sent to the Australian High Commission on Thursday did not elicit an immediate response.
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