Favourable Policies Needed

The Indian wine market is set for exponential growth, driven by favourable duty and tax regimes in certain
states and the reduction in customs duty on imported wines. However, high initial investment and operational costs, along with economic uncertainty, continue to deter young entrepreneurs from entering India's wine business.

The dominance of large corporations also makes competition difficult for new entrants. In such a scenario, Indian wineries are also facing challenges due to inconsistent state policies, high taxation and market perception issues.

Taking the Lead

Abhay is of the firm opinion that harmonising tax and regulatory frameworks requires centralised policy making, industry collaboration and policy advocacy. "States like Maharashtra and Karnataka can serve as models for implementing wine-friendly policies, and pilot programmes in select states could demonstrate the benefits of a harmonised approach," he says.

Now, wines made from other fruits are included in the wine policies of states like Uttar Pradesh, Madhya Pradesh, and some states in North-east India, which do not have significant grape cultivation, explains the wine entrepreneur. Potential solutions include further policy harmonisation, marketing efforts to improve perceptions and infrastructure development. What also needs to be taken into account are consumer preferences that are shifting towards wine, especially among urban and younger demographics, with growing interest in carbonated wines as an alternative to beer.

"The revenue generation is still niche but growing, and future growth prospects are positive, driven by lifestyle changes and regulatory improvements," Abhay states.

According to him, the Indian Wine Association (IWA) can support wine manufacturers by advocating for favourable policies, promoting Indian wines domestically and internationally, facilitating research on viticulture and winemaking, and providing education and training programs for the industry.

As for example, the India-Australia Free Trade Agreement that has reduced customs duties on wines from Australia from 150 percent to 95 percent for wines priced above 5USD and up to 15USD, and a similar reduction for wines above 15USD. This will increase competition for Indian wineries but also provide opportunities for collaboration and market expansion.

"In India, imported wines are often perceived as superior due to historical reputation, brand recognition and taste preferences. However, the reduction in customs duties on premium wines will open up the market, providing consumers with more affordable choices and potentially altering perceptions of Indian wine quality," asserts Abhay.

Challenges & Potential

Other than the regulatory and taxation issues, market access difficulties and quality perception challenges and climate change affect grape quality and yields. According to Abhay, adaptation strategies include researching climate-resilient grape varieties and investing in sustainable practices.

Abhay says that some unexplored wine regions such as North-east India, Uttarakhand, Himachal Pradesh, and parts of eastern India like Bihar and Odisha, show potential for wine production. These areas have favourable climates and unique terroirs that could diversify and enhance India's wine offerings.