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India’s basic import duties on wines have been increased to 150% though. This is in line with WTO guidelines. The US and European Union had complained against India at the World Trade Organisation on high level of duties. Various states can still impose their own local duties on wine. However, these duties are imposed on all wines entering the state irrespective of whether they are imported or domestically produced wines.
This cut in duties will result in an annual revenue loss of Rs. 25 crore for the states. The domestic liquor market is concerned that this reduction in taxes will lead to the flooding of the domestic market with cheap liquor affecting the health of the market.
It is left to be seen how the different states will respond. They may increase taxes on all out of state wines to make up for some of the lost revenue and thus keep wines quite expensive. And with the increase in the basic custom duties, the prices of the most expensive wines may even increase slightly.
View our previous coverage on the Indian wine duties saga for background information. Subscribe to Sommelier India, India’s only wine magazine today.