The Australian wine industry has received some much-needed good news on the export front with the signing of the Australia-India Economic Cooperation and Trade Agreement (AIECTA).
The common customs tariff on wine imported to India has been 150 percent, making it a challenging market for imported wine.
Under the free-trade arrangements, tariffs on Australian wine with a cost, insurance and freight (CIF) value of over US$5 per 750ml bottle will decrease to 100 percent.
There will be a further phased reduction of five percent per year for 10 years down to 50 percent.
Tariffs on Australian wine with a CIF value of over US$15 per 750ml bottle will decrease to 75 percent, with a further phased reduction of five percent per year for 10 years down to 25 percent.
Australia is the first major wine producing country to negotiate a free-trade deal with India.
The move will help to ease some of the pain for the Australian wine industry after China introduced crippling tariffs.
Wine Australia General Manager, Corporate Affairs and Regulation Rachel Triggs, says, “There is potential for growth in the sale and consumption of Australian wine in India with Australia already having the greatest share of the imported wine market.
“In particular, the AIECTA will make India a more viable proposition for small to medium winemakers who have not previously contemplated entering into that market.
“The wine culture in India is maturing as consumers discover and learn more about wine.
“It’s exciting to contemplate Australian winemakers playing a role in that maturation, and the AI ECTA will make it easier for them to do so.”
Through the AIECTA, India has also agreed to extend any preferential arrangements for wine afforded to other trading partners in future to Australian wine.
“The strengthening of the relationship between India and Australia through the AI ECTA creates an excellent platform upon which we can pursue a meaningful dialogue with India about regulatory and technical matters relating to the trade in wine,” Triggs says.
In the 12 months to the end of December 2021, Australian wine exports to India increased by 81 percent in value to $12 million – a record value of Australian wine exports to India.
Volume also increased by 71 percent to 2.5 million litres, and 74 percent of this volume of wine was red wine.
According to IWSR, Australian wine held a 42 percent value share of the imported wine category in India in 2020, well ahead of Italy (14 percent), France (12 percent) and Chile (11 percent).
IWSR reports that 72 percent of the volume of wine consumed in India is produced domestically.
Euromonitor International reports that a rising middle class, increasing urbanisation, an inclination towards imported wine and a shift in consumer preferences from hard spirits towards wine are expected to drive wine consumption in the forecast period, which is predicted to reach 55.5 million litres by 2025, up from 29.2 million litres in 2020.
Euromonitor International reports that the most popular red wines in India include Cabernet Sauvignon and Shiraz, while for white wine Chenin Blanc and Sauvignon Blanc are popular.