The top-grade Chardonnays and Cabernet Sauvignons, the Merlots and Pinot Noirs won’t come cheap after all.
Blame it all on a swadeshi lobby of varied interests that has nixed your prospects of getting your favourite imported wines at reasonable prices in the faint hope that you might settle for the plonk that Indian vineyards dish out.
Early this week, the government tweaked the duty rates on imported wines in response to a groundswell of protest from the US and the European Union, which slammed India for breaking World Trade Organisation (WTO) rules.
The government announced that it was scrapping the additional customs duty on wines, but it quietly raised the basic customs duty from 100 per cent to 150 per cent (164 per cent, taking into account extra central levies).
Additional customs duty used to be levied at 75 per cent for cheap wines priced at below $25, 50 per cent on wines costing between $25 and $40, and 20 per cent for wines costing more than $40.
The duty change takes the fizz off a market that is believed to be growing at a pacy 30 per cent annually.
The re-calibration of the central duties will immediately make the cheap imported wines affordable but the prices of the more expensive Bordeaux and Burgundys will shoot up.
“Wines priced below $25 a case would see a reduction of around 20-25 per cent in prices, while expensive wines priced above $40 a case could see an increase in prices by about 10-15 per cent,” says Adil Mehra of GTFT, a leading wine importer.
Agrees Aman Dhall, executive director of Brindco Sales Limited, the largest importer of wines into India: “There will be no significant impact on the prices of the more expensive imported wines.”
The Americans and the Europeans have been chafing over both central and state levies which send wine prices zooming by as much as 500 to 700 per cent in states like Maharashtra, which has earned the notoriety of having the highest levies among all states in the country.
Wine importers like Sanjay Menon of Sonarys reckons that he hasn’t heard the last of the duty changes, and the prices will hinge on how states revise their levies.
Menon reckons that states like Maharashtra could raise their levies very sharply.
“If imported wines are now available in the state between Rs 5,000 and Rs 30,000 per bottle, the revised state duties could see imported wine prices surging to Rs 15,000 to Rs 90,000 per bottle,” Menon told The Telegraph.
Mumbai is the largest market for wines in the country and a major chunk of the domestic wine-making industry is located in the state. Experts say the total wine consumption in India is between 1,30,000 and 1,40,000 cases annually — and high-priced wines account for 30 per cent of the overall market share.
“The domestic lobby is active, pushing its cause. Some political leaders are encouraging farmers in Maharashtra to cultivate grapes and switch over to Vitis vinifera, from which different varieties of wines come. And that means imported wines are likely to attract very high duties,” says a source who does not wish to be identified.
Menon doesn’t think the strategy will work or that the epicures will settle for the local stuff. “The consumer will not replace imported wine with local wine. The imported wines are at a different quality level and the consumption motive is vastly different.’
Others feel that the duty changes will actually hurt the local winemakers — at least in the short term.
“With the difference in rates between imported wines and the domestic bubbly diminishing, consumers would not mind paying Rs 150 to Rs 200 more to taste a French or an Australian variety,” says Subhas Arora, founder of the Delhi Wine Club.
Adds Kapil Grover, MD of Grover Wines: “Domestic wine sales are going to be affected adversely if the prices of foreign wines come down. In the present scenario, it is likely that the Indian wine companies will experience a dip in sales.”
The arguments have already started to build as state governments hunker down to take their decision on a duty revision for imported wines.
The Indian wine makers are already whining that unless the state levies on imported wines are raised, their market share will erode.
On July 3, the Centre urged state governments bring down their taxes on imported alcoholic beverages equivalent to the excise duty paid by domestic manufacturers. However, the states are free to decide when they should do this.
Says Grover: “We are expecting the state governments to raise their levies and not reduce them.”
Agrees Abhay Kewadkar, director of Four Seasons Wines and chief wine maker for USL: “I am expecting the state levies to go up.” He argues that domestic wineries need protection.
A commerce ministry official said that though the Centre’s recommendation was “not a fiat”, it expected states to slash duties on imported wines since the country was fighting a legal battle before the WTO.
The states may choose to wait and, in any case, duty revisions will need to be ratified by state cabinets and their legislatures — which could be a long-drawn procedure. They will also need to find other ways to offset any revenue shortfalls they incur because of any duty revision
Blame it all on a swadeshi lobby of varied interests that has nixed your prospects of getting your favourite imported wines at reasonable prices in the faint hope that you might settle for the plonk that Indian vineyards dish out.
Early this week, the government tweaked the duty rates on imported wines in response to a groundswell of protest from the US and the European Union, which slammed India for breaking World Trade Organisation (WTO) rules.
The government announced that it was scrapping the additional customs duty on wines, but it quietly raised the basic customs duty from 100 per cent to 150 per cent (164 per cent, taking into account extra central levies).
Additional customs duty used to be levied at 75 per cent for cheap wines priced at below $25, 50 per cent on wines costing between $25 and $40, and 20 per cent for wines costing more than $40.
The duty change takes the fizz off a market that is believed to be growing at a pacy 30 per cent annually.
The re-calibration of the central duties will immediately make the cheap imported wines affordable but the prices of the more expensive Bordeaux and Burgundys will shoot up.
“Wines priced below $25 a case would see a reduction of around 20-25 per cent in prices, while expensive wines priced above $40 a case could see an increase in prices by about 10-15 per cent,” says Adil Mehra of GTFT, a leading wine importer.
Agrees Aman Dhall, executive director of Brindco Sales Limited, the largest importer of wines into India: “There will be no significant impact on the prices of the more expensive imported wines.”
The Americans and the Europeans have been chafing over both central and state levies which send wine prices zooming by as much as 500 to 700 per cent in states like Maharashtra, which has earned the notoriety of having the highest levies among all states in the country.
Wine importers like Sanjay Menon of Sonarys reckons that he hasn’t heard the last of the duty changes, and the prices will hinge on how states revise their levies.
Menon reckons that states like Maharashtra could raise their levies very sharply.
“If imported wines are now available in the state between Rs 5,000 and Rs 30,000 per bottle, the revised state duties could see imported wine prices surging to Rs 15,000 to Rs 90,000 per bottle,” Menon told The Telegraph.
Mumbai is the largest market for wines in the country and a major chunk of the domestic wine-making industry is located in the state. Experts say the total wine consumption in India is between 1,30,000 and 1,40,000 cases annually — and high-priced wines account for 30 per cent of the overall market share.
“The domestic lobby is active, pushing its cause. Some political leaders are encouraging farmers in Maharashtra to cultivate grapes and switch over to Vitis vinifera, from which different varieties of wines come. And that means imported wines are likely to attract very high duties,” says a source who does not wish to be identified.
Menon doesn’t think the strategy will work or that the epicures will settle for the local stuff. “The consumer will not replace imported wine with local wine. The imported wines are at a different quality level and the consumption motive is vastly different.’
Others feel that the duty changes will actually hurt the local winemakers — at least in the short term.
“With the difference in rates between imported wines and the domestic bubbly diminishing, consumers would not mind paying Rs 150 to Rs 200 more to taste a French or an Australian variety,” says Subhas Arora, founder of the Delhi Wine Club.
Adds Kapil Grover, MD of Grover Wines: “Domestic wine sales are going to be affected adversely if the prices of foreign wines come down. In the present scenario, it is likely that the Indian wine companies will experience a dip in sales.”
The arguments have already started to build as state governments hunker down to take their decision on a duty revision for imported wines.
The Indian wine makers are already whining that unless the state levies on imported wines are raised, their market share will erode.
On July 3, the Centre urged state governments bring down their taxes on imported alcoholic beverages equivalent to the excise duty paid by domestic manufacturers. However, the states are free to decide when they should do this.
Says Grover: “We are expecting the state governments to raise their levies and not reduce them.”
Agrees Abhay Kewadkar, director of Four Seasons Wines and chief wine maker for USL: “I am expecting the state levies to go up.” He argues that domestic wineries need protection.
A commerce ministry official said that though the Centre’s recommendation was “not a fiat”, it expected states to slash duties on imported wines since the country was fighting a legal battle before the WTO.
The states may choose to wait and, in any case, duty revisions will need to be ratified by state cabinets and their legislatures — which could be a long-drawn procedure. They will also need to find other ways to offset any revenue shortfalls they incur because of any duty revision
(The Telegraph)
