ITB 2024 Special Reporting
Death by Over-regulation: Wine Import Business.
By Sommelier India
Friday, 13th May 2011
The next time you crib about the price tag on the imported wine you are drinking, blame the Indian Government.

Not only are import duties high, with each state following a different excise policy, the mark-ups ensure that by the time the wine bottle reaches your table, it is considerably more expensive than it should be. SI correspondent Alok Chandra has the low down.

The intrepid importer has not only to comply with multifarious requirements and demands of Central Customs and State Excise departments, he has also to convince the somewhat jaded hotel managements and retailers to stock and sell their wares.

Although the import of alcoholic beverages into the country was "liberalised" in 2003 when they were moved from the "restricted" list to that requiring an open general licence, there is no official website or manual for import guidelines.

So technically, all that's required to import the stuff is an import export code, and the ability to meet various other formalities imposed by customs on imports. To decipher these codes, however, you need a "consultant".

He will explain to you the intricacies involved in clearing and forwarding your wines to move your consignment from the ship to the warehouse where the wines will be stored; and a customs-bonded warehouse to store the wines till they are ready to be debonded for sale.

While the consignment can be moved by air or sea, the former is much more expensive, and is done only in extremis or when the unit value of the wines justifies the expense (say, for a Grand Cru Bordeaux).

The customs clock starts ticking the day the goods enter the country -- they allow "free" storage for up to 90 days, after which they will charge a penalty at 1.25 per cent a month on the deemed customs duty when you debond the wines. They also demand a bank guarantee for the deemed duty amount of goods imported, and in any case, allow duty-free storage for 12 months at the most.

That's the simple part.

Selling your wines in India is a lot more complicated, simply because alcoholic beverages are a state subject, so every state has its own rules and regulations and duties and taxes.

It's like operating in 28 different countries! It is this complexity (and the accompanying cost) that befuddles vendors and scares away most wine producers from coming to India, never mind the volume potential here in the years to come.

At the simplest level, there are three sets of costs when selling imported wines:

(1) ex-bonding and customs duties; (2) label registration and state duties; and (3) trade margins, listing fees, and marketing expenses. Altogether, the retail price of an imported wine gets driven up anywhere from 8 to 10 times its freight-on-board price -- so what you buy for Rs 1,500 would probably have cost about Rs 2.0 per bottle (?????).

No wonder all foreign travellers are aghast at prices here for very ordinary wines -- the only defence possible is to state that "at least imported wines are now available in India", and hope that duties and taxes will reduce over time so as to make imported wines more affordable.

What is Sommelier India?
It is India's first and only magazine dedicated to wine and wine lovers. Filled with news, feature articles, wine profiles and the culture surrounding wine, Sommelier India is written by international and Indian writers, wine experts and aficionados.

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