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Why in the news?
India signed a free trade agreement (FTA) with Australia this year. Now there is a possibility of entry of established Australian and European winemakers into the country.
What does the agreement says about wine?
This is the first time that India has agreed to liberalise wine under a trade pact. However, the agreement only covers 2 per cent of wine imports from Australia.
Under the FTA, India agreed to reduce customs duty on Australian wines, but in a staggered manner. The stage wise manner was to ensure that domestic wine industry doesn’t end up being subjected to predatory pricing.
According to the new structure, tariffs on wine with a minimum import price of $5 per bottle will be reduced from to 100 per cent once the deal is implemented and subsequently to 50 per cent over 10 years. The duty on bottles with a minimum import price of $15 will be reduced to 75 per cent, and subsequently to 25 per cent over 10 years.
Benefits of including wine in the agreement
In India, the (grape) vine yield is lower compared to top wine-producing countries.
Australia can help India, since it has the expertise to improve vine yields, and speed up the growth of the plantations.
Australia can also help the domestic industry to align Indian wines to efficiently tackle non-tariff barriers, such as meeting stringent international requirements for certification.
