The French saying “plus ça change, plus c’est la même chose” (the more it changes, the more it remains the same) seems to be apt every time the government undertakes anything new regarding wines.
The Karnataka government will implement its new wine policy in the state from August 1 — with a twist. While proposing to ease the rules and reduce the licence fees for setting up new wineries and “wine taverns”, the government has simultaneously sought to increase the cost of importing wines from outside the state from Rs 10 to Rs 300 per litre, thereby increasing costs to consumers by Rs 280 per bottle, and wiping out most wines now being brought in from Maharashtra.
This is really a tit-for-tat game being played out in retaliation to the entry barrier, raised some years ago by Maharashtra, for wines from outside that state, which are currently charged duties at 150 per cent of their “declared manufacturing cost” in addition to a registration fee of some Rs 7.20 lakh per annum.
The only winery outside Maharashtra which still sells wines into that state is Grover Vineyards (the Goan wineries gave up a long time back), which has been pressing for retaliation for some years now. Grover’s being a member of the Karnataka Wine Board would have facilitated the presenting of their case to the present state government.
Curiously, while wines imported from overseas remain practically untouched, the new rules seek to exclude “fortified wines”, sparkling wines and Champagne from any benefits under the new liberalised licencing rules. This means that many imported wines will be a lot cheaper than wines from Maharashtra — a hugely anomalous situation.
If the objective is to force Maharashtra to reduce its tariff barriers, then this move may have the opposite effect as the powers-that-be could well dig in their heels and refuse to give in to (what may be perceived as) “blackmail”.
In any case, it is likely that the big Indian wine companies will set up bottling or manufacturing operations in Karnataka for some or all of their wines in the near future — much in the same way that Grover’s has already done in Maharashtra.
The only ones who will lose (apart from you, dear consumer) due to tariff barriers in each state are the new small wineries, who do not have the resources to follow suit, and who will end up selling their wares mostly within the same state. Moreover, since new vineyards and wineries take time to come up, Grover’s will have a virtual monopoly in the state for some time. When will our policy-makers realise that the wine industry needs to be encouraged to grow by making quality wines at the lowest possible cost to consumers, and that erecting inter-state tariff barriers merely fragments an already minuscule market?
The wine industry in India has the potential to grow to 50 million cases in 20 years — this represents investments of over Rs 10,000 crore. It will attract investment from both within as well as outside India, provided it has the space to grow without artificial barriers or constraints.
Not that investors here will make any money quickly — that old quip about “How do you make a small fortune in wine? Start with a large fortune” is very much a truism.
Unfortunately, wines are seen as an “elite” product, so I do not expect any rollback from the Karnataka government, and consumers should be prepared to either pay more in the coming months for other Indian wines, or settle for whatever is “Made in Karnataka". A sad day for the industry — nothing to cheer about here.
