India a ‘slow burn’ for fine wine despite tax hope

India will be a 'slow burn' for wine merchants and investors, even if the country does sign a free trade agreement with the European Union, experts believe.

The European Commission is pressing India to cut a 150% federal import tariff on wine as part of a trade deal, which the two sides hope to sign by the end of 2012. That would give India’s emerging middle class greater access to top Bordeaux and Burgundy wines.

‘One of our key requests is to see tariffs cut on alcoholic beverages, including wine,’ a Commission spokesperson told Decanter.com. He declined to specify a target, but said proposals are ‘ambitious’. Some reports have said the tariff could be at least halved.

However, even if a trade deal is reached, experts think India is unlikely to follow the trajectory of Hong Kong, which scrapped duty tax on wine in 2008 and has seen sales soar.

Anthony Maxwell, director at the Liv-ex fine wine index, told Decanter.com, ‘India is going to be a slow burn. Hong Kong was already an established wine market, whereas India is coming off a very low base. Hong Kong also cut duties to zero, which is the Holy Grail, and I don’t see that happening in India.’

Julian Campbell, assistant buyer at Diageo-owned Justerini & Brooks, added, ‘India is definitely on the radar, but the market hasn’t been properly tested yet.’

Wine consumption in India should reach 2.4m nine-litre cases by 2020, according to research group The IWSR.

Despite high tax, interest in high-end imported wines is growing, as shown by the Union des Grands Crus de Bordeaux hosting tastings in Mumbai and New Delhi earlier this week.

Maxwell said, ‘I think India will get there, it’s just going to take five to ten years, rather than two years.’

Written by Chris Mercer