Commerce minister Kamal Nath with French trade minister Christine Lagarde in New Delhi on Monday. (AFP)

New Delhi, Dec. 4: India and the EU will try to resolve the dispute over wines bilaterally. Commerce minister Kamal Nath today discussed ways towards a settlement with the trade minister of France, Christine Lagarde.

EU has moved the WTO over the high duties by India on European wines and spirits. India, in turn, has complained of curbs against Indian whiskies in Europe.

At a joint press meet with Lagarde after the meeting, Nath said, “The French minister strongly raised the issue… I hope we will resolve this by dialogue and it won’t have to reach the next stage of dispute settlement.”

The issue is at the stage of formal consultations at the World Trade Organisation (WTO), which necessitates the dispute be settled within 60 days.

The EU, which had moved the WTO for consultations, could slam retaliatory tariffs against India, if the talks flounder at the WTO. Last month, EU had moved the WTO under the dispute settlement understanding over duties by India on spirits and wines.

The European action was the outcome of investigations against the barriers in India, at the behest of spirits and wine producing organisations in Europe.

The EU claims five years of diplomatic parleys have failed to resolve the dispute and that its 10-month probe into the matter was marked by an “unprecedented” lack of co-operation from India.

India defended its actions, saying the extra tax was a retaliation against the ban on its whiskies by some EU members.

“The two sides can only settle the dispute based on reciprocity,” Nath had said earlier.

“The western countries should give due recognition to the whisky made in India,” he added.

European companies are keen to prise open the Indian market where spirit consumption is growing 4 per cent annually since 2000. The wine market is expanding at a faster rate of 9 per cent annually. EU says India has imported wine worth 4 million euros.

The two sides must negotiate for at least two months before European Commission, the EU’s executive arm, can ask the WTO to step in and begin work on a ruling. A legal decision, once that work starts, may take at least 18 months.

EU claims that India imports less than 1 per cent of its spirits and about 15 percent of the wine consumed domestically. The extra duties by India has pushed up the levies to the range of 177 per cent to 540 per cent.

It said Indian whisky is distilled from molasses and flavoured without ageing, whereas whisky from Scotland is distilled from barley and made to mature over several years.