It’s going from 20 per cent to 25 per cent!” “It’s coming down to four per cent.” “No, it’s still at 20 per cent!”
Sections of the media have, of late, been full of contradictory claims on what’s happening to VAT on wines in Maharashtra. Reminiscent of a poorly-staged natak, the dramatis personae include Sharad Pawar, minister for agriculture, Sham Chougule, chairman of the National Wine Board, and sundry bureaucrats and politicians, all claiming to want to “protect the interests of the humble farmer”.
The “humble farmer” is one of the holy cows of India — ignored and left to wander the fields (or streets) with nary a care from those in authority or power until politics or circumstances force those-that-be to pay attention to his plight. In this instance, the proverbial straw was a recent announcement that increased VAT on all wines sold in Maharashtra from 20 per cent to 25 per cent. This gave rise to howls of protest from various quarters, prompting the respected minister to direct the state administration to bring down the impost to 4 per cent (of course, only for wines produced within the state) ASAP.
Now, as readers may be aware, wine occupies a peculiar position in Indian society, in general and Maharashtra, in particular. On one hand, it is an alcoholic beverage — as such “bad” — and subject to checks and controls that state excise departments have devised for the category. On the other hand, wine is made from grapes that are grown by farmers — considered “good” — and, as such, remains the recipient of state support (at least in Maharashtra and Karnataka). Oh, yes, there are consumers hanging about somewhere in the background, but who’s bothered about them!
The effort to support the industry in these two states has translated into protectionism: by raising tariff barriers against wines from other states (and from overseas), the average cost was increased by about Rs 300 per bottle last year, at a time when recession was driving consumers away. No wonder that sales of wines in India is estimated to have declined by some 20 per cent in 2008-09. Faced with unjustifiably high prices, people will always vote with their wallets.
I tire of repeating that the wine industry in India needs investment to grow to its rightful size of about 30 million cases (20 times the present volume); that such growth will come only when decent-quality wine is also available at below Rs 200 per bottle; that such pricing is only possible with lower production and marketing costs, taxes and increased competition; and that in the end, it is the consumer, not politicians or bureaucrats, who decide. We don’t need a circus, just rational policies and lower taxes for all.
Wines I’ve been drinking:
Casanova di Neri Brunello di Montalcino Tenuta Nuova 2003 is a 92-point red wine made from the Nebbiolo grape in the Piedmont region of north-west Italy. It is quite a mouthful, both literally and figuratively. Dark red, with an intense aroma of berries and cherries, this is a full-bodied wine with soft tannins, a complex structure with the fruit carrying to the palate, and a finish that just goes on and on. Lovely — even though expensive at nearly Rs 6,000 per bottle in Bangalore. But that’s not bad when set against the release price of $80 per bottle.
As the Italians say, cin cin!
