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K. Giriprakash

Bangalore, Aug. 29 Even as the wine industry witnesses a boom in the country, there are quite a few importers who are shutting down their operations because of fluctuating policies of various State Governments and ever increasing taxes.

“At least three importers have closed down their operations during the last quarter,” Ms Dharti Desai, the Chief Executive Officer and founder of finewinesnmore, a major wine importer, told Business Line.

Mr Sanjeev Arora, who founded Gold Star, an importer of wines, said he closed down his operations recently because of difficult policies of the Government. “I had to let go of Gold Star because it can be very difficult when you deal with the (various) Governments,” Mr Arora said.

Brand Wagon is another such importer which had to wind up the company for similar reasons.

According to another analyst, there are several more that come to India regularly after being attracted by the market potential. But only a few decide to start operations here.

Wine consultant Mr Alok Chandra points out that some of the new entrants tend to get taken in by the boom in the market and set up their operations without adequate planning. “They don’t realise that each State in India is like a separate country with its own taxes and regulations as far as the liquor trade is concerned,” he said.

But the wine industry, according to some estimates, is growing at about 30 per cent, which makes India one of the fastest growing markets in the region. The market size, according to Mr Chandra, is about 1.5 million cases of locally produced wine and 150,000 cases of imported wines.

Ms Desai pointed out that the Maharashtra Government carried out at least four changes in its excise policy during the last 12 months, which resulted in sales drying up for nearly three months during the last fiscal. The Government also levied 200 per cent excise duty, apart from the 150 per cent customs duty, which imported liquor attracts in the country.

To fulfil the WTO requirements, the Central Government last year removed additional taxes on import of spirits and wines but retained basic customs duty on spirits at 150 per cent and increased the duty on wines to 150 per cent from 100 per cent. But it allowed various State Governments the option to retain their right to levy their own taxes on imported liquor.

Ms Desai said that importers are now moving away from States such as Maharashtra and Karnataka to the North, hoping that those States will be kinder to them. “But what needs to be understood is that players can succeed only if they are here for the long term. Except a few, most others are not making money,” she said.

But Mr Arora said that it can be a very good learning experience if one decides to stay back in the business, but for that, importers need to come prepared with patience as well as lots of cash.

More Stories on : Outlook | Breweries | Policy

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