Just about 2% of India’s wine imports from Australia are covered by the price thresholds prescribed for duty concessions under the interim trade agreement that both the sides signed in April, according to an ICRIER report. Moreover, bulk wine imports from Australia are not eligible for duty concessions under the agreement.
India has committed to reduce tariffs on Australian wine progressively from 150% to 50% over 10 years for bottles valued over $5. Similarly, it will cut the duties to 25% over 10 years for bottles valued over $15. The minimum import price is proposed to be indexed every 10 years, based on Indian wholesale price index for wine.
This means India has taken care in protecting interests of its domestic producers. At the same time, it granted Australia the relief that no other country has received so far. However, the Indian consumers will continue to pay more for most bottles of Australian wine.
New Delhi agreed to include wines for the first time in any of its trade agreements when it signed the India-Australia Economic Co-operation and Trade Agreement (ECTA).
The report, Liberalisation of Wine Trade under the India-Australia CECA, is authored by Arpita Mukherjee, professor at ICRIER and a noted expert in trade agreements, and researcher Drishti Vishwanath.
Australia is the second-largest exporter of wine to India, after France, but the country’s total wine imports still amount to only a few million dollars, primarily due to the prevalence of the high duties.
The report suggests that unless bulk wine imports are not liberalised and only finished products are allowed at concessional duties, it will lead to an inverted duty structure. Moreover, permitting bulk imports at concessional duties will potentially result in greater value-addition in India.
According to the report, around 40 Australian companies export wines to India.These include brands such as Jacob’s Creek, De Bortoli, Penfolds and Westend Estate. Indian firms such as Sula Vineyards and Grover Zampa Vineyards are expanding their market presence in countries like the UK, the US and Japan and have recently started tapping Australia as a viable market for exports.