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Australia–India Economic Cooperation and Trade Agreement welcomed by wine industry bodies

Wine industry organisations Wine Australia and AGW have welcomed the announcement that the Australian and Indian Governments have signed the Australia–India Economic Cooperation and Trade Agreement (AI ECTA).

When the AI ECTA enters into force, preferential tariff treatment will be afforded to premium Australian wine imported to India, making Australia the first major wine producing country to negotiate such arrangements.

“There is potential for growth in the sale and consumption of Australian wine in India with Australia already having the greatest share of the imported wine market. In particular, the AI ECTA will make India a more viable proposition for small to medium winemakers who have not previously contemplated entering into that market,” Wine Australia General Manager Corporate Affairs and Regulation Rachel Triggs said.

“The wine culture in India is maturing as consumers discover and learn more about wine. It’s exciting to contemplate Australian winemakers playing a role in that maturation, and the AI ECTA will make it easier for them to do so.”

Through the AI ECTA, India has also agreed to extend any preferential arrangements for wine afforded to other trading partners in future to Australian wine.

“The strengthening of the relationship between India and Australia through the AI ECTA creates an excellent platform upon which we can pursue a meaningful dialogue with India about regulatory and technical matters relating to the trade in wine,” Triggs said.

In the 12 months to the end of December 2021, Australian wine exports to India increased by 81 per cent in value to $12 million – a record value of Australian wine exports to India.

Volume also increased by 71 per cent to 2.5 million litres, and 74 per cent of this volume of wine was red wine.

“This agreement is a positive first step in our sector’s market-diversification agenda as we seek to recover from the loss of the market in China,” said Tony Battaglene, Chief Executive of Australian Grape & Wine.

“The agreement is beneficial for very high-value wine producers, many of which are small and medium-sized businesses. They will now have confidence to explore new opportunities in the Indian market as the staged tariff reductions are implemented.

“We see this as the first step towards a mutually beneficial long-term relationship between the Australian and Indian grape and wine sectors.

“We want to work with our Indian counterparts to share expertise and engage in technical and regulatory cooperation over the long-term.

“As the relationship develops, we hope to further improve market access arrangements to benefit both Indian consumers and our respective grape and wine sectors.

“We know this has been a tough negotiation and we thank the Australian Government for its efforts in landing this interim agreement. But we hope that the final agreement delivers more comprehensive market access for a larger share of our industry, and we’re looking forward to working with all parties – Australian and Indian – to help make this happen.”

The common customs tariff on wine imported to India is 150 per cent, making it a challenging market for imported wine.

In accordance with the AI ECTA, tariffs on Australian wine with a cost, insurance and freight (CIF) value of over US$5 per 750ml bottle will decrease to 100 per cent upon entry into force, with a further phased reduction of 5 per cent per year for 10 years down to 50 per cent. Tariffs on Australian wine with a CIF value of over US$15 per 750ml bottle will decrease to 75 per cent upon entry into force, with a further phased reduction of 5 per cent per year for 10 years down to 25 per cent.

Wine in India – fast facts

  • According to IWSR, Australian wine held a 42 per cent value share of the imported wine category in India in 2020, well ahead of Italy (14 per cent), France (12 per cent) and Chile (11 per cent).
  • IWSR reports that 72 per cent of the volume of wine consumed in India is produced domestically.
  • Euromonitor International reports that a rising middle class, increasing urbanisation, an inclination towards imported wine, and a shift in consumer preferences from hard spirits towards wine are expected to drive wine consumption in the forecast period, which is predicted to reach 55.5 million litres by 2025, up from 29.2 million litres in 2020.
  • Euromonitor International reports that the most popular red wines in India include Cabernet Sauvignon and Shiraz, while for white wine Chenin Blanc and Sauvignon Blanc are popular.

 

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