AUSSIE WINE TARIFFS TO INDIA REDUCED UP TO 50% THANKS TO TRADE DEAL
By Siulan Law Mathews DipWSET
Credit: Akshay Chauhan/Unsplash
Australia and India signed the Australia–India Economic Cooperation and Trade Agreement (AI ECTA) last Saturday, tariffs on Australian wine exports to India will be cut by 33 to 50 percent upon enter into force, while further reductions will phase in over a 10-year period.
Expected to become effective in the next four months, the AI ECTA is an early harvest agreement and both sides will continue to negotiate for a more comprehensive free trade agreement.
Tariffs on Australian wine with an import price of over USD5 per 750ml bottle will decrease to 100 percent upon entry into force, with a further phased reduction of 5 percent per year for 10 years down to 50 percent.
While tariffs on Australian wine with a value of over USD15 per 750ml bottle will decrease to 75 percent upon entry into force, with a further phased reduction of 5 percent per year for 10 years down to 25 per cent.
These reductions were very close to what the Indian alcoholic beverage industry has suggested to the government, indicating that worries of the Indian domestic industry have been taken care of.
Australia is the first major wine producing country to have successfully negotiated preferential tariff treatment on wine exports to India.
Wine Australia, the country’s wine marketing board, welcomed the new arrangements.
“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 AI ECTA will make India a more viable proposition for small to medium winemakers who have not previously contemplated entering into that market, said Rachel Triggs, Wine Asutralia’s General Manager for Corporate Affairs and Regulation.
“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,” Triggs added.
The common customs tariff on wine imported to India is 150 percent, making it a challenging market for imported wine.
Despite this, Australian wine exports to India increased by 81 percent in value to AUD12million (USD9m) and 71 percent in volume to 2.5 million litres in 2021, a record value of Australian wine exports to India.
According to IWSR, Australian wines held a 42 percent value share of the imported wine market in India in 2020, well ahead of Italy at 14 per cent, France at 12 percent and Chile at 11 percent.
Australia and India started talks for a free trade deal 10 years ago. Negotiations only sped up in the past year since Australia’s relations with its biggest trading partner China turned sour.
This early harvest deal with India will see tariffs reductions in more than 85 percent of Australian goods exports to India, rising to almost 91 percent over 10 years.
On the other hand, 96 percent of Indian goods imports entering Australia will be tariff-free when this deal becomes effective.
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