In a letter to the ICRIER board and commerce and industry minister Piyush Goyal, the Confederation of Indian Alcoholic Beverage Companies (CIABC) alleged that ahead of the negotiations for a full pact, called the Comprehensive Economic Cooperation Agreement (CECA), the Delhi-based think tank took foreign funding for a research report on the wine sector that favoured Australia’s interests.
While the interim pact signed in April is yet to be ratified, CECA talks are likely to begin. ICRIER, in its report, noted that India should consider including bulk imports of wines under concessional tariff in the CECA, as that 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 anomalous situation where imports of bulk raw material are taxed more than the finished good. This makes domestic manufacturers who use the raw material 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 of tariffs. India will charge up to 100% duty on wines costing $5 and above with immediate effect and offered to bring this down to 50% in 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.
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ICRIER dismisses liquor lobby's allegations
“I am aware of the credible reputation of ICRIER has and hence am at pains to draw your attention to the use of the ICRIER platform to conduct partisan and motivated campaigns to favour foreign interests and against the Indian industry," Vinod Giri, director-general of CIABC, said in the letter reviewed by Mint.
"One is aware that ICRIER gets a significant amount of funding from foreign governments and entities. As per its own website, ICRIER received ₹4.53 crore from the British High Commission in just the three years ending March 2021. Since the British High Commission has direct stakes in the outcome of the FTA discussions, it is even more important for ICRIER to maintain objectivity beyond doubts with respect to studies & reports on FTA-related matters," CAIB said in the letter.
Responding to the allegations, the think tank said it is “preposterous to allege that ICRIER is acting at the behest of a particular group".
“The allegations by one of the officeholders of CIABC are unfortunate and baseless. ICRIER has had no official role in FTA negotiations between India and Australia. The only connection may be our two reports that are publicly available. Our reports dealt with a sensitive topic of international commerce and recommended further liberalization of cross-border trade in the wine sector. While the officeholder is free to pursue his/ her own limited interest, our reports have taken a holistic approach and factored in the interest of producers, user industries, importers, and consumers," ICRIER said.
It added that “our report only highlights current impediments to the growth of trade, possible solutions and gives recommendations, which are non-binding. The further liberalization of trade will eventually depend on negotiations between the two governments, where various factors will determine the outcome."
ICRIER has a star cast of Indian economists associated with it, including Shankar Acharya, Anwarul Hoda, Deepak Gupta and Ashok Gulati. Its board of governors include leading business figures Uday S. Kotak, Kiran Mazumdar-Shaw, and Pramod Bhasin. Its directors have included internationally reputed economists late I.G. Patel and late Isher Judge Ahluwalia.
ICRIER said the allegation it catered to foreign interest was baseless as it was “the ministry of commerce (MoC) which had asked us to publish one of the studies while the second study was conceptualized in consultation with DPIIT (department for the promotion of industry and internal trade) with reference to ease of doing business across states."
Giri said CIABC’s core contention is that an objective study from an established institution should be objective, fact based, and that generalizations should not be made. “The alcohol industry is fine with the deal signed with Australia. The deal envisages a 10-year horizon (of duty reduction on imported wine), and there is no concern at all," Giri said in an interview.
ICRIER has published two reports on the alcoholic beverage industry—Liberalization of Wine Trade under the India Australia CECA, which was released by the Indian high commissioner to Australia Manpreet Vohra and Australia deputy high commissioner to India Sarah Storey, and Developing Principles For Regulation of Alcoholic Beverages.
One of the reports pointed out that the high price threshold agreed under the interim pact will only benefit high-income Indian consumers, leaving out the middle-class buyers and the Indian hotel and tourism industry, highlighting the scope for further liberalization of tariffs in wines 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. In addition to MoC, officials in the ministry of food processing industries and ministry of finance (customs), as well as experts at NITI Aayog, were also consulted during the preparation of these reports. All the stakeholders are fully aware of our recommendations."
The ministry of commerce and industry said the IndAus ECTA agreement was signed after comprehensive consultations with numerous industry bodies (national and product-specific bodies), industrialists, experts, economists, consultants, various government departments and the relevant ministries.
“CIABC, among others in its sector, was also in regular touch with the government. The positive response to the IndAus ECTA agreement has been widely reported in the media, including your newspaper. Negotiations for final agreement have not started, and it is absolutely illogical and wildly speculative to write about it," a spokesperson for the commerce ministry said.
Queries sent to the Australian high commission on Thursday did not immediately elicit a response.
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