In a move to promote domestic wines produced in the state, the Maharashtra Government has doubled the special excise duty on imported wine from the existing Rs 100 per bulk litre to Rs 200, reports The Economic Times. The state government has also raised the vend fee per bottle of imported wine from Rs 75 to Rs 150. Industry observers predict that the two steps will make imported wines across the board costlier by Rs 100 (after the addition of VAT and octroi) in star hotels and independent restaurants.
Maharashtra's state capital, Mumbai, incidentally, is the biggest makret for both domestic and imported wines. The addition duty is over and above the customs duty levied by New Delhi. “The hike in levy is to protect the wine producers of the state," The Economic Times quoted the state's Excise Commissioner, C. S. Sanitrao, as saying. "We know that bulk wines are imported at a low price, hence we raised the special excise duty on the import of wine on a par with the import of spirits.”
The excise order, which was passed on December 16, clearly has been pushed through under pressure from the domestic wine lobby, which now has a strong spokesman in the form of Sula's Rajeev Samant and a patron saint in New Delhi in the form of the Maratha strongman and India's Agriculture Minister, Sharad Pawar. Pawar's family was the first to launch a domestic wine label called Bosca and its proximity to Maharashtra's grape growers, who are increasingly switching over to wine grapes, is well-known.
Ironically, the constant equation of wine with spirits by excise officials runs contrary to the recent pronouncement by Pawar, and that of a draft policy prepared by the Ministry of Food Processing Industries, Government of India, that the time is ripe for wine to be treated differently from spirits.
Figures quoted by The Economic Times peg the market for imported wines in Maharashtra at about 30,000 cases, compared with 200,000 cases of domestic wines.
Imported wines don't present a clear economic threat to the domestic industry. Domestic wine manufacturers, on the other hand, complain they are not only subjected to vexatious excise rules, which vary from state to state, but also face discrimination from five-star hotels, which price them higher than the imported wines.
This rampant discrepancy has arisen because five-star hotels find it cheaper to stock imported wines because of the customs duty exemption they have been enjoying for the last three years.
By making imported wines costlier than they already are, state governments like Maharashtra are reducing the choices available to wine connoisseurs. These moves also make the business of wine imports and distribution that much more difficult in India.
Domestic wine manufacturers, naturally, are upbeat. Chateau Indage's Ranjit Chougule justified the step as being a much-needed support for farmers who have invested heavily in wine grape cultivation, anticipating a bright future for domestic labels. He told The Economic Times that the threat of cheap wines from abroad capturing the domestic market loomed over the fledgling domestic wine industry.
The covert practice of buying bulk wine from abroad for a less than a dollar and then selling the wine in Maharashtra as a domestic product was also thriving in the state, he said. Samant, meanwhile, raises the issue of the price discrimination in star hotels. “Why can't the star hotels in the country promote Indian wines. US hotels had deliberately promoted Californian wines, and now you know where Californian wine stands in the world of wine,” he told The Economic Times .
The founder of Sula Wines, incidentally, has been doing exceeding well in the bulk wine business. His merlot, Satori, is bought in bulk from Santa Rita, the Chilean winery, and then bottled in Maharashtra. By going with the flow, he's only indicating his level of confidence in his labels, especially Madera, which, though at the bottom of the barrel as far as connoisseurs are concerned, has captured the mindspace of the market.