The fledgling domestic wine industry will now have to face stronger competition after India announced major duty cuts on imported liquor, ostensibly due to pressure from the EU and the US.
The government on Tuesday withdrew the additional customs duty of up to 150 per cent on imported liquor. The EU and the US had taken up the duties India imposes on imports of wine and distilled spirits with the World Trade Organisation (WTO).
Industry estimates suggest that the current size of the domestic wine market in India is about 700,000 cases of wine with the potential of reaching 2.8 million cases over the next five years. At present, the domestic wine industry is worth Rs 300 crore and, according to the vision document prepared by the ministry of food processing, it is expected grow to Rs 5,000 crore by 2011.
“Domestic consumption of wine is growing at a compounded annual rate of 25 per cent and we expect this rate to sustain over the next few years as disposable incomes increase, prices come down and drinking habits change,” an industry source who did not wish to be identified said.
Wine constitutes less than 1 per cent of the entire alcoholic drinks market in India, which is worth Rs 8,000 crore. There are three main wine producers in India — Champagne Indage, Sula and Grovers.
Seagram’s also recently announced its foray into the wine segment. India imports 120,000 cases of wine annually. Of this 47 per cent is imported from France and the rest from various other countries, including the US, Chile and South Africa.
Importers said the decision to cut duties could bring down the prices of Scotch and wine by up to 30 per cent. India has also emerged as one of the world’s largest whisky markets, selling 60 million cases in 2005-06, according to the Scotch Whisky Association.