REPORT: ONLY 2% OF AUSSIE WINE EXPORTS TO INDIA WILL ENJOY TRADE DEAL TARIFF REDUCTIONS
By Siulan Law Mathews DipWSET
Credit: Sylwia Bartyzel/Unsplash
Just about 2 percent of India’s wine imports from Australia are above the price thresholds set for duty reductions under the interim trade agreement signed between the two countries, according to a report released by the Indian Council for Research on International Economic Relations (ICRIER).
In the agreement signed in April, India committed to cut tariffs on Australian wine progressively.
Tariffs on Australian wines with an import price of over USD5 per 750ml bottle will decrease to 100 percent upon entry into force, expected within four months from signing date, with a further phased reduction of 5 percent per year for 10 years down to 50 percent.
While tariffs on Australian wines 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.
The ICRIER report said majority of the Australia wines imported to India is bulk wine, which is not covered by the tariff reductions, and
only 2 percent of the imported Australian bottled wines are over the threshold price of USD5 per bottle.
The report suggested that unless bulk wine imports are included in the concessional tariffs, it will lead to an inverted duty structure where cheaper wines are being taxed higher as a proportion to its price.
However, the report also said that permitting bulk wine imports to enjoy tariff reductions will potentially result in higher prices in India.
The report, named Liberalisation of Wine Trade under the India-Australia CECA, is authored by Arpita Mukherjee, professor at ICRIER and a noted expert in trade agreements, and researcher Drishti Vishwanath.
According to the report, around 40 Australian companies export wines to India. These include brands such as Jacob’s Creek, De Bortoli, Penfolds and Westend Estate.
Indian firms such as Sula Vineyards and Grover Zampa Vineyards are expanding their market presence in countries like the UK, the USA and Japan and have recently started tapping Australia as a viable market for exports as well.
Australian wine exports to India increased by 81 percent in value to AUD12million (USD9m) and by 71 percent in volume to 2.5 million litres in 2021, setting a new record 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 percent, France at 12 percent and Chile at 11 percent.
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