Industry proposes delicensing of wines

The wine industry in India, which has suffered because of high taxation, has sent a proposal to the central government to delicense wines. If this is done, wines will be removed from the category of spirits and alcohol and fall in the agro-commodities category.

According to Abhay Kewadkar, business head and director, Four Seasons Wines, the strategy behind the proposal is two-pronged. First, it aims to get the item delicenced and, hence, get some taxation relief. Second, if the promulgation comes through, wine can be sold at grocery shops as well, ensuring growth of the market. The proposal has been sent under the aegis of the Indian Grape Processing Board (IGPB). Kewadkar also heads the marketing committee at IGPB.

 

“At present on a Rs 400 bottle of wine, the sales tax is Rs 130. This automatically drives up the cost of wine, making it an unviable option. Around the world, wine is treated as a beverage and sold in grocery shops. It only makes sense to do the same in India,” he added.

Currently, the wine market in India is pegged at around 1.5 million cases a year. This is supposed to be growing at 40 per cent annually.

The average price of a standard wine bottle is pegged at Rs 450 ($10), as opposed to international wine markets where a standard bottle is pegged at $5. The average price of an imported bottle of wine in India is around Rs 1,000 ($20). The cost is multiplied in the case of imported wines given the fact that these are subjected to a 150 per cent Customs fee over and above taxation at the state level. Imported wines command about 20 per cent of the market in India.

“Wine, an alcoholic beverage, can be treated as an agro-based industry given the fact that wine is made from the fermentation of grapes. There is no distillation involved in the process. This also means it is a farmer-friendly industry,” Kewadkar said. However, the industry is yet to take off, given the positioning of wine in India as a leisure product. This has also translated into many farmers in Pune and Nashik wine-growing areas going out of business.

Kewadkar, however, says: “Every single winery which is run professionally is doing well, across companies. Because of liberal policies of the Maharashtra government, many farmers started wineries, but some have shut down because of a lack of substantial infrastructure.”