|The Government of Karnataka has recently notified the rules under which their Wine Policy (announced a year back) is to be implemented. Essentially, while reducing licence fees and liberalising the issue of licences for new wineries and ‘Wine Taverns’, the state government will increase the import fee on wines from outside Karnataka (made in India) from Rs 10 to Rs 300 per litre. Alok Chandra reports on the import fee.|
This will increase the MRP on wines from Maharashtra and Goa (the only states producing and exporting wine) by Rs. 280 per bottle, and effectively wipe out this business.
Curiously, while the notification affects imported wines only marginally, it also seeks to club Fortified Wines with Sparkling Wines and Champagne and deny these three categories any of the benefits of the liberalised policy.
The tax increase is seen in industry circles as a retaliation for what Grover vineyards has been suffering for years in Maharashtra, where wines from outside the state pay 150% excise duty and have to obtain a Form K costing Rs 7.20 lakh per year, while local wineries are exempt from the same.
The Maharashtra wine industry has been rudely jolted as over 80% of the 46,250 cases of ‘premium’ wines sold last fiscal in Karnataka came from that state, and are renewing efforts to persuade their own government to ease the tariff barriers imposed so that the Karnataka authorities may be persuaded to relent.
Interestingly, some consumers have taken strong exception to the role played by Grover Vineyards (whose head Kapil Grover is a member of the Karnataka Wine Board, and has played a key role in persuading the state government to increase the tariffs on wines from outside the state).
Wine sales in Karnataka averaged 15,000 cases per month in 07/08, growing @ 30%, with imported wines selling 1,150 cpm (+42%), premium wines 3,850 cpm *30%) and ‘cheap’ (fortified) wines 10,400 cpm (30%).
It remains to be seen what will happen in the future here – will keep you posted.