P Krishna Kumar
New Delhi, Jan 30 (.). The inclusion of alcoholic beverages, including wines, in the list of items which will attract lower duties in the just concluded India-EU Free Trade Agreement has literally brought cheers in the Indian Alcobeverages market.
Citing the way India-Australia Economic Cooperation and Trade Agreement had a transformational impact on the market, industry pundits hopes that a similar cut in customs rates for European wines would “really make the market quite exciting sooner than later”.
Speaking to . on the sidelines of a Italian wine event, VinItaly, in Delhi early this month, Antonio Enrico Bartoli, Italian Ambassador to India, said that Italian wines which commands 20 per cent market share in India, “can do much more,” if high tariff barriers are lowered.
Wines and spirits currently attract a duty of 150 per cent. This is proposed to be brought down to 20 per cent for premium wines and 30 per cent for medium range wines.
Today, a normal Italian wine bottle costs almost five times its original price. With duty reduction, premium Italian wines could be available in the Rs 1,500–Rs 2,500 range, Vas Shenoy, chief representative for Italy of Indian Chamber of Commerce, explained.
Shenoy said, “It is extremely important that wine was included in the FTA, but equally an important sign that duties on Italian flour, pasta and olive oil will eventually go to zero. this is a sign of India’s openness to a more cultural and people to people connect.”
The India – EU FTA will drive a lot of “ energy and excitement” into the European alcobeverage companies to look at India as a major opportunity, added Vikram Achanta, founder of Tulleeho, a bar consultancy and training company. With the FTA coming into effect, he observed that the Indian companies have to “up their game to stay relevant”.
Sonal Holland, the first Indian Master of Wines, said that the reports that the duty cut on wines will be applicable only for wines which cost at least Euro 2.5, is a good news “as it will discourage dumping cheaper wines into the market and also protect Indian domestic market.”
She said that with the duty cut, Indian importers who used to look for European labels priced up to Euro 2 or 2.5 so far because of heavy import duties, will now be encouraged to look for more premium labels.
For Indian importers who were hit by the rupee’s fall against the euro in the last couple of years, the duty cuts will act as “shock absorber”, she said.
Gagan Sharma, a sommelier himself, and founder of Indulge India, a wine and beverages consultancy felt that the FTA will make the field more exciting and competitive especially in a market which was dominated by “new world wines” of South Africa, New Zealand, Australia, Chile, etc. primarily because of preferential trade treatments these countries enjoy with India.
Indian consumers have a traditional affinity towards European wines because of their premium quality. So far high prices deterred people from buying them. With affordability, the natural preference for European wines will come to the forefront, Sharma said.
While the FTA implementation will definitely help make European wines more accessible and affordable, the industry watchers caution about unhealthy practices that may creep in leading to supply chain “gobbling up” the benefits and not transferring the tax cuts to consumers. . KK JRC
