Wine finds its feet, but stumbles on red tape

India’s wine market is rapidly maturing despite being a small segment of the alcohol industry. Young, urban consumers are shifting wine from occasional indulgence to a lifestyle choice focused on health and sophistication. This cultural change creates opportunities in vineyard tourism and storytelling, but also exposes challenges like cost pressures, inconsistent policies, and global competition. The sector needs streamlined, supportive policies to thrive, suggests Uma Chigurupati, Co-Founder and Managing Director-KRSMA Estates Pvt. Ltd.

Credit it to the changing culture and tastes of the young generation; that is the factor contributing to India’s growing wine market. Although still modest, accounting for about one percent of the total alcohol sales, the market is projected to grow at a compound annual growth rate (CAGR) of 10 percent over the next five years.

“Indian consumers are becoming more discerning, with a growing appreciation for terroir-based wines,” observes Uma. KRSMA is now recognised as a wine originating from the Hampi Hills in Karnataka, and the company has played a pivotal role in ensuring consumers know exactly where their wine comes from. “Wine tourism has been instrumental in this shift, offering immersive experiences that educate and engage visitors, fostering a deeper appreciation for India’s diverse wine offerings,” she adds. Vineyards are increasingly chosen as venues for themed events such as destination weddings and conferences, further cementing their place in the cultural landscape.

While wine sales have seen an uptick, the sector is facing challenges too. The input costs are constantly rising due to various factors, significantly impacting small-scale producers by squeezing margins and influencing production decisions.

“Though we are a premium wine company, constant cost escalations affect overall finances, particularly in markets heavily dependent on events. We strive for operational efficiency to mitigate these challenges, but the industry’s longterm sustainability depends on policy reforms around taxation and pricing flexibility. Inter-state movements and price wars also affect national distribution,” Uma explains

Reforms for Revival 

KRSMA Estates’ Co-founder shares that wine producers and importers commonly urge state governments to formulate uniform and transparent excise policies. They advocate for guaranteed retail access, infrastructural and financial support, and state sponsorship of wine festivals, tastings, and cultural pairing events. There is a pressing need to promote vineyards as agri-tourism or ecotourism destinations, establish regional branding for wines (e.g. ‘Wines of Karnataka’), and create wine education centres and technical training hubs. Support for quality benchmarking, voluntary GI tagging, and helping smaller producers access export markets through collective branding and compliance training is also essential. A widely shared concern is that many wine trade associations tend to prioritise larger players, often sidelining smaller wineries that feel underrepresented and excluded from broader industry agendas.

Policy Challenges

Many states like Maharashtra and Karnataka have introduced supportive measures such as winemaking policies, incubation centres, tax breaks and promotional schemes to foster local production. These often include lower duties and taxes for inter-state sales. However, producers and importers would like to see state excise departments welcome wines from other states with similar duty structures like those of locally made wines. “This would also encourage healthy competition and strengthen the case for Indian wines among consumers,” she notes.

With the India– Australia Free Trade Agreement (FTA) now in effect and a trade deal with the EU on the horizon, the Indian market is also set to see an influx of imported wines. “Not only will the India–EU FTA intensify competition for Indian wines, but it will also bring in many labels from France, Italy and Australia,” she comments. This shift is expected to elevate market standards and expose consumers to a broader range of wine experiences, enabling them to choose based on quality as well as price.

By embracing authentic terroir, quality differentiation, strategic partnerships, policy advocacy, and cultural branding, Indian producers will not only be able to defend their turf but thrive in a more sophisticated wine landscape.