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NEW DELHI : Only 2% of Australian wine imports will get lower duty access to the Indian market under the free trade pact agreed by the two nations, according to a report released by the Indian think-tank ICRIER on Thursday.
The report pointed out that the high price threshold agreed upon under the interim pact will only benefit wealthy Indian consumers, leaving out middle-class buyers and the Indian hotel and tourism industry. This, it said, highlights the scope for further liberalization of tariffs in wines and removal of non-tariff barriers under the full India-Australia comprehensive agreement (CECA), due to be signed in December 2022.
India has, under the interim pact, agreed to reduce the duty on Australian wines. Tariffs on wine with a minimum import price of US$5 per bottle will be reduced from 150% to 100% after the deal’s implementation and subsequently to 50% over 10 years. The duty on bottles with a minimum import price of US$15 will be reduced from 150% to 75%, and subsequently to 25% over 10 years. The report, “Liberalization of Wine Trade under the India-Australia CECA", was released by the Indian High Commissioner to Australia, Manpreet Vohra and Australia’s Deputy High Commissioner to India, Sarah Storey. “After discussion with all stakeholders, we have found the threshold level should be US$25 per case of 9 litres or 12 bottles of 750 ml FoB (free on board)," Arpita Mukherjee, professor, Icrier, and co-author of the report, said.
She added that while the report was shared with policymakers on both sides, there was confusion on how the threshold was determined in the Interim agreement as it only covers 2% of imports — “so high-income consumers will have cheaper wine while middle-income consumers will pay 150% duty for mid-range products."
India and Australia signed the Economic Cooperation and Trade Agreement (ECTA) on 2 April, giving India duty-free access on 95% tariff lines that it exports to Australia. The report pointed out that the deal may lead to an inverted duty structure for the wine industry in India as duty has not been reduced for bulk imports of wines, making finished items cheaper than those getting bottled in India.