Fipb To Discuss Rkw'S Wine Unit Proposal Today
Germany's Reh Kendermann Weinkellerei (RKW), one of the top five wine makers in the world, has proposed to set up shop in India to manufacture, process and bottle wines. This will be done in collaboration with an Indian company. RKW, whose parent company, Gunther Reh, controls over 50 per cent of the French wine market, will hold 74 per cent equity stake in the venture.
Projecting an export earning of $17.25 million over six years, RKW also proposes to establish a winery with an annual capacity of 12.60 million litres and a model farm with R&D facility. It also proposes to import bulk wines for blending.
RKW has told the Foreign Investment Promotion Board (FIPB), which is slated to discuss the proposal today, that the Maharashtra government has agreed to grant permission for setting up of a winery near Nashik.
The project, whose foreign investment inflow is estimated to be about $29.5 million, is aimed at meeting the growing demand for wines in Asia and Europe. Since Gunther Reh has a well-establsihed marketing and distribution network in over 86 countries, a significant part of the output from RKW's winery will be exported. RKW has also undertaken to balance outgo of foreign exchange towards import of bulk wines and dividend remittance by exporting wines and allied products permitted by the govrenment.
The winery project is expected to cost Rs 60 crore and will be implemented in two phases. The first phase will involve three years when the model farm, R&D facility and cultivation of grapes will be undertaken. Gunther Reh has 11 production facilities in Germany, France, Poland, Russia and Romania. In the UK, Gunther Reh's market share for German wine amounts to 40 per cent. RKW has stated in its application that this will not only be the first FDI proposal for setting up a winery and R&D centre in India, but also the biggest FDI project in horticulture in terms of employment generation with 15,000 jobs to be created. It has also stated that the joint venture company will support agricultural universities for development of high-quality seeds and culture of grapes. The support will be in the form of grants and scholarships for higher education.
After months of restraint, the FIPB has again listed for discussion five FDI proposals related to non-molass-based alcohol projects. The proposals listed for discussions are those of Reh Kendermann of Germany, Brown Forman and Co, Seagarm Ltd, Allied Domecq and Whyte & Mackay. The industry ministry has been deferring listing of such alcohol-related projects as the food processing ministry had asked for the same. According to government sources, the food processing ministry, which is the administrative ministry for non-molass-based alcohol projects, had been wanting to change the existing policy. Though the food processing ministry is yet to announce any change, experts have pointed out that the Centre's bid to have the right to licence such potable alcohol projects may tantamount to the contempt of a 1997 Supreme Court judgement which ruled that the Central government has no say in the matter of licensing, and that power ought to lie with the states.