France wants lower duties on wine

Twelve leading wine exporting countries, led by France, are seeking reduction in customs duty on imported wine.

Ambassadors representing these countries have penned a joint letter to Kamal Nath, minister of commerce, government of India, urging him to look into the matter.

Dominique Girard, ambassadors of France in India, said the letter would be sent to the minister in a week.

"I have signed it already and others will do it soon," the ambassador said.

France, Italy, Chile, Australia, Spain and Argentina are among leading producers and exporters of wines. Girard pointed out that the move had the blessings of Indian manufacturers of wines and they supported the move.

He was speaking at an interactive session at the Indian Chamber of Commerce in Kolkata.

Consumption of wine in India has grown rapidly in last few years but it is hamstrung by high level of central and state levies.

According to industry estimates, a bottle of wine with c.i.f. value of Rs 100 is generally sold at Rs 600 in the market place.

Apart from the import duty and countervailing duty of 150-250 per cent depending upon the price slab, a bottle of liquor attracts costs like import pass and export fee when wine is carried from one state to another.

On top of it, there are items like label registration fees and state level sales tax and central sales tax. Total consumption of wine in 2003-4 stood at close to five lakh cases with the import standing at 37,000 cases, while China consumes close to 50 million cases wine a year.

Local producers feel entry of foreign label would expand the market in India and improve quality.

"The industry needs foreign technical inputs and also investment. We may have to do labelling for foreign players but it can not be avoided either," Shiv Kapur, managing director of Victoria Wines.

The volume was small because of the prohibitive cost and if the duties were slashed the sale could go up by three to four times rapidly.