|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.
This is Karnataka’s tit for tat policy to counter Maharashtra’s Rs. 200 per btl tax on wines imported from other states/countries. The situation was so ridiculous that a Grover wine that sold in Bangalore for Rs. 315 was priced at Rs. 500+ in Pune & a Sula wine that sold in Pune for Rs. 500 was available in Bangalore for 350! In all this the Govts. and the wineries supporting such taxes are only making the govt. richer and making a monkey out of the consumer. Talk about cutting one’s nose to spite one’s face. In the larger interests of the growing wine loving public, both Govts. should drop this tax on imports.
I had the pleasure of meeting Kapil during a recent flight to Mumbai we took together. Just to let you know, other than a consumer, I have no connection with the alcoholic beverage industry.
Along with being a member of all 3 wine clubs in Bangalore, the Bangalore Wine Club, the Wine Society of India, and the Rotarians Wine Fellowship of India, I also head the Infrastructure Committee at the Bangalore Chamber of Industry and Commerce. I raised this issue with my peers at CII, FKCCI, and FICCI. While we all disagree with the petty actions of Maharashtra, we all are unanimous in condemnation of the actions of Karnataka which has been instigated by GVL management.
At the time Indian industry is being pushed to improved productivity and quality due to falling protection, GVL wants to bank on increased protection.
Yes, the short-sighted actions of Maharashtra state do deserve a response; but definitely, not such an extreme punitive action, which penalise YOUR CUSTOMERS, along with your competitors. Already wine is an expensive beverage discouraging many potential consumer from taking up this healthy drink, and pushing them towards unhealthy spirits instead.
I recently did a double blind tasting of two bottles of La Reserve. One vintage 2003, and one labelled 2004, but bottled in Apr 2007. Both bottles were purchased by me, in 2004 and 2007 from Classic, and professionally stored in my Euro Cave wine cabinet. The tasters were highly experienced members of the Bangalore Wine Club, the Wine Society of India, and the Rotarians Wine Fellowship of India. All persons were unanimous in their appreciation of the 2003, and in CONDEMNATION (I use this word deliberately) of the 2007.
Devesh R. Agarwal
Mr.Agarwal is spot on. I hope sound economic sense prevails and that Grover, Samant, Chougule and others ask the Mah and Kar. Govts. to drop the import taxes. It’ll expand the market and increase consumption. Re: Grover quality, it’s been downhill for a while and I’m hoping Mr. Grover will do something to bring it back to the top.
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The recent notification of wine policy in Karnataka has opened up ample oppartunities for new enterprenures and definately many will come forward to reap this , there is no reason to say GVL is playing the protective policy. No voice of concern was raised so far, all alone, wineries from neighbouring states were enjoying the tax capping policy eluding consumers of their choice. With larger interest of own state grape growers this policy will add a dimension to new entrants to consolidate their position in this Mr Kapils moove will be apreciated in large thanks to gov of Karnataka.