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West uncorks spirited campaign for free flow of wine

New Delhi, Nov. 28: After the Scotch invasion of India, European and US vineyards have now launched a ‘war’ to force their way into India.

US and European diplomats and top trade officials, who have been visiting the Indian capital this month, have been busy lobbying for a reduction in the high tariff walls against cheap wine imports.

The implicit message in the lobbying effort is that if the wall is not lowered, Indian farm exports like rice, sugar and marine products could encounter new reciprocal barriers.

EU officials are taking the opportunity of the Indo-EU summit meeting to press their case for a relaxation in the trade curbs on French, Belgian, Portuguese and Spanish wines. The US embassy had used the opportunity of the visit by the US under secretary for commerce, Kenneth Juster’s, to press the case for Californian wines.

“It’s ridiculous. The duty on hard liquor such as Scotch and other whiskies is lower than wine, which is a soft alcoholic drink,” said Heinrich Poell, an EU adviser.

Cheap wines, which retail for as low as less than $25 in the EU or US, have a total duty burden three times their value in India, making them unaffordable. Whiskies, on the other hand, attract a total duty burden of about two-and-a-half times the value of a bottle and whisky imported in barrels come in at an even lower rate.

“The basic duty on wines is lower than on spirit, but the countervailing duty, calculated on the import price plus the basic duty, is far higher for bottled wines,” said Ramesh Mani, director-business development (India & Middle East) of Cutty Sark International, which markets its trademark Cutty Sark Scotch here besides a clutch of Bordeux wines.

Over the years, Scotch whisky makers have “sensitised” the Indian government to the need to legalise the unofficial Scotch trade, which had seen copious amounts of the drink being smuggled into India.

“This led to India agreeing to lower duties on whisky barrels, though duty on bottled in origin whisky remains high,” said Mani. As a result, from a situation where legal imports were just a few thousand cases in 1992, it now stands at about half-a-million cases.

But now the EU and the US are threatening a new trade war with India on their vineyards’ demands that India lower its guard. Apparently, the government had some time back promised a French trade delegation steps to eliminate countervailing duty on wines, claim liquor company sources, but did not keep its word.

The wine market is small, at just 250,000 cases, when contrasted with that of whisky, which stands at some 55 million cases. But is expected to grow at a scorching 20 per cent once it is opened up to cheaper varieties of foreign wines. Most wine producers are not looking at current numbers but at the future potential.

European firms believe the growing middle class with its increasing disposable income and changed aspirational tastes sums up to mean the Indian market holds immense potential for them. Cutty Sark has already identified India, Brazil and China as its largest future markets.

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