Indian vintners are likely to remain unaffected by lower duties on premium European wines under the India-EU free trade agreement as the duty cut largely bypasses the price segment in which domestic producers operate, experts said.
Currently, imported wines in India are subject to a steep 150% import duty. Under the new pact, this duty will be reduced to 75% and eventually reduced to 20% for premium wines and 30% for mid-range wines, according to an official statement from the European Commission. Meanwhile, wines priced below EUR 2.5 will not get any duty relief, PTI reported.
Industry executives said the tariff cut structure, combined with the small size of India’s wine market, will limit competitive pressure on domestic producers. “If this is correct, then the domestic wine industry will not be affected at all, as more than 80% of domestic wines will be below this threshold,” said an industry executive.
Karan Kamdar, research analyst at brokerage Choice Institutional Equities, said: “The impact of the FTA on India’s alcobev is likely to be minimal. Wines may be the most affected by EU imports, but wine only accounts for 2% of India’s alcohol consumption by value. It is a premium category and there is not enough education yet for mass consumers to move towards wine faster.”
India’s wine market still represents a tiny fraction of total alcohol consumption, and price cuts alone are unlikely to trigger a surge in imports. Wine accounts for less than 1% of India’s total alcohol volume, while complex state taxes, registration fees and distribution barriers continue to restrict foreign brands.
As a result, any duty exemption is expected to benefit only a narrow band of premium imports, rather than reshaping the wider market. “Anyone who buys imported wine costs money ₹1,500, and ₹A 100 drop won’t make much difference,” the executive said.
Spirits that will bear the brunt
In contrast, the impact of the trade agreement is expected to be more visible for spirits, where volumes are larger and consumers are more familiar. “You can see some differences in spirits portfolios where duties are to be reduced to 40 percent,” said Vinod Giri, CEO of the Brewers Association of India (BAI), referring to European spirits under the pact. He added that mass international brands stand to gain more from the duty reduction as products like vodka already enjoy wider acceptance among Indian consumers.
However, shares of listed Indian winemakers fell on Monday due to short-term investor caution. Sula Vineyards closed 3.1% lower ₹188 on the NSE, while Fratelli Vineyards fell 4.6%. ₹87.4 on BSE.
Sula Vineyards CEO Rajeev Samant told Mint that while red wine has traditionally led the market, rising temperatures and changing preferences are pushing the company to expand its portfolio of cooler varieties such as rosé, taste new cities through urban wine festivals and limit imports amid growing competition.
Beer battle
The wider alcohol sector is also bracing for tougher competition in beer after tariffs on imported European beer were cut from 110% to 50%. This will narrow the price gap between international brands and domestic premium brands and intensify competition on value, said Vedant Kedia, director of Mount Everest Breweries Ltd, which owns brands such as STOK and Mount 6000.
“While brewing inputs such as hops and grain are relatively stable, packaging – specifically aluminum cans and glass bottles – remains a significant and volatile cost that is sensitive to changes in trade,” Kedia said.
However, lower tariffs are expected to support growth in the mass premium segment. “Our premium brand STOK has grown by 75% over the last year, proving that Indian consumers are already eager to trade up for better quality,” said Kedia, adding that the company plans to capture a larger share in this segment by offering affordable price points.
The evolving business environment could also allow firms to diversify their portfolios more aggressively. “These shifts have allowed us to explore high-quality ingredients, new cooking styles and unique collaborations that were once considered too narrow,” added Kedia.
