The European
Union, not amused by India’s reluctance to bring down duty tariffs
on imported wine and spirits, has knocked on the doors of the WTO for
redress. The ball now lies in India’s court. The present tariff structure
ensures that fine imported wines are still the preserve of the well-heeled
in India; even so, one often ends up paying astronomical prices for
mediocre fare from Napa Valley or Bordeaux. The scenario on the domestic
front does not bring much cheer either. Excise duty is highest on wines;
spirits attract less burden. There is a crying need to rectify this
anomaly in the interests of all parties involved - consumers, indigenous
wine manufacturers and farmers. Though domestically produced malts still
account for more than half of all alcohol consumed across India, there
is a quiet revolution underway in the glasses of those who fancy a drink.
Wine sales in India are growing at about 30 per cent annually. As more
Indians gain international exposure, they are acquiring new tastes.
There is the element of the aspirational associated with wine as it
is perceived to be a more sophisticated drink. What’s more, the proven
benefits of red wine make it a hit with the increasingly health conscious
Indian. The taboo associated with stiffer spirits does not generally
extend to wine, making it popular among women as well. Thus the market
for wine cuts across age and gender.
The state, however, has its stock
reasons to justify the irrational duties - the revenue excise duties
generate, and archaic notions of being the custodian of the nation’s health. Parity in duty structures
between spirits and wine is more effective than prohibition; the increasing
scale of consumption will offset revenue lost by reducing duties. It
has spin-off benefits as well, especially for the agrarian sector. Presently,
about 60,000 hectares are under wine cultivation in India, Maharashtra
and Karnataka accounting for most. As the domestic market for wine expands,
there is potential to bring more arable land under wine cultivation.
Vineyards need much less water than paddy or sugarcane and thrive in
dry weather, of which there is no dearth in India. Where possible, farmers
must be given incentives to move away from unsustainable crops
to cultivating varieties of grapes suited to making wine. There
is a good case for allowing wine and beer to be easily accessible -
by reducing duties and allowing supermarkets to vend them - in keeping
with the logic of consumer demand. The sooner government catches whiff
of this trend, the greater its chances of cashing in.
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