Indian wine industry grows nearly 300% in the last decade

NEW DELHI—India's domestic wine industry expanded nearly 300 percent in the last decade to an estimated 13.5 million liters annually, according to a report by the US Department of Agriculture.

According to the report, India has an estimated 60 functional wineries, with 30 more companies having registered to become wine producers in 2010 in contrast to only six wineries in 2000.

It said the growth of domestic wines has been helped by a tariff protection from imported competition in the form of high customs duties and excise rates.

"With the aid of high import and excise tariff, India has developed a small wine industry over the past decade as production has expanded nearly 300 percent since 2003 to an estimated 13.5 million liters," the report said.

Although the volumes of imported wines have grown gradually over the decade 0.45 million liters in 2003 to 1.01 million liters in 2010, it is not as big as the growth witnessed by domestic producers due to a variety of reasons, it pointed out.

"India lifted ban on wine imports in 2001 and appeared to be on the verge of becoming a promising market for imported wines...(but) Indian wine importers face a complex system of excise taxes and licensing requirements that vary from state to state and significantly raise the cost of imported wines," it said.

Commenting on the growth of the domestic wine producers, the report said Maharashtra accounted for two-thirds of domestic wine production. Most of the wine is produced in the area around Nashik and Sangli.

Apart from Maharashtra, Karnataka and Goa are the other significant producers of wine in the country, it said.

According to the report, the domestic wine industry faces several challenges which includes state limits on farm size and high cost of farm land.

"...state limits on farm size and the high cost of farm land make it difficult for wineries to secure large tracts of land and many must rely on establishing relationships with multiple small farmers to secure sufficient quantities of grapes," it said.

"Some industry experts speculate that wine production might be better suited to the cooler climate in parts of Northern India," it added.