Exporting Wine to India

Vinho

This is perhaps the most important set of questions that we get asked – How is the Indian market, do Indians really drink, what are the taxes, how does one go about getting wine into India. So we thought it would be easier to address this once and for good. Once again, what we are putting here is a general idea and the actual requirements could be a bit different. If you find discrepancies please mail us and we shall amend accordingly.

Indians do drink; if anything intoxication and over-indulgence would be the more serious of our problems. The market, which has laid dormant for some time was growing silently but the anticipated rush from increased commercial activities, foreign direct investments, shooting markets, a leaping economy, 2010 Commonwealth Games, and the arrival of multinational retail outlets across Indian cities and towns is signalling a never-before change on the horizon.

Onto the next topic: wine logistics. Moving wine into or even within India is a nightmare. In fact, it is so tough that part of the success in the wine business depends on how you manage to reach the correct wines to their target destination. So, to help simplify how things work, here is a hopefully-not-too-confusing explanation of bringing wines into India.

If you are intending to send wines for a tasting, then know that courier is a tough channel; simply because there is no telling when it works and when it doesn’t. Too many narrow-minded and unprofessional people have piled up their personal stocks by importing wines under this pretence all while promising wineries a distribution plan. The result has been that wineries are left feeling embittered and cheated and courier companies have gotten smarter. If you must send stock, try and limit quantities to no more than one bottle of each wine or else send smaller bottles. A better plan would be to forward (sea/air) through a registered licensed wine importer. The documents required to clear the shipment are as follows:-

  1. Commercial Invoice
  2. Packing List
  3. Country of Origin Certificate
  4. Chemical Analysis Report
  5. Air Way Bill Copy

Once the documents are received by the clearing party, the shipment can be cleared and bonded either in a private or a public warehouse. Ideally, you should bond the stock in a duty-free custom-bonded warehouse or else the customs will insist for a PHO (Prevention of Health), under the PFA (Prevention of Food Adulteration) Act. If this happens then the shipper will be required to send one bottle of each wine for a laboratory test for which samples will have to be drawn from the consignment and once the report comes as positive (i.e. fit for import), only then will customs release the remaining stocks. A different label of a wine even from the same wine-house is considered as a different wine for the sake of examination.

While all this is being conducted you will have to pay detention charges to the Airport Authority for holding the stocks for as many days as required till the test results come back. By bonding in a Custom Bonded Warehouse, all these problems can be avoided.

Finally, the stocks can be transferred to the importer’s warehouse. From here, the stocks can be moved after payment of customs duties and the destination’s state levies.

To give an idea of how the duties and local levies calculation works, do have a look at the attached Excel sheet. (I still can’t figure out how to upload the file itself but write us and we shall be happy to mail it to you.)

Some things which have been assumed and you may change as per your own case specifications would be as follows:

  • Freight charges (cost of shipping from your winery to the final destination, usually a port like Mumbai. This will also change depending on the medium and quantity of stock sent.)
  • Current conversion rate for the Euro (which is used in this table solely to calculate the State duty in Delhi)
  • VAT and TCS have been added but some hotels may prefer to see price lists without the same.

So, as you can see, it isn’t exactly a cheap affair; even simple wine becomes fairly expensive, and to this will be added the most incomprehensible and incorrigible and irrational of margins yet to be inflicted on the wine: that of the hotels and restaurants (roughly 3-5 times of their buying price). So, for the consumer, the selling price of a wine on a hotel list in India is about 30 times or more than what it is in a similar restaurant in the country of origin of that wine.

Hence, it is incorrect to say that Indians do not drink wine because it is not a part of their culture or because it does not go with spicy Indian food. Indians do not drink wine because it is extremely expensive and unaffordable. The only reason we drink Indian wine (well some of us who are desperate enough at least) is because we have to pay less for it than any foreign wine in retail.

However all is not despair; there is a duty-free scheme made available to all establishments that earn foreign exchange. Mostly hotels but also some restaurants are allowed to import a certain percentage of their foreign exchange earnings without paying central (custom) duties. This means an exemption of around 160%. Now, wines become a lot more affordable. This is not available to all restaurants and not at all to retail but there also some good news is awaited. Wine is soon to be classified as a soft alcoholic beverage and, along with beer, would soon be available through many other retail channels than just liquor shops. A similar license could also be introduced which would cost a lot lesser than the full-range liquor service license. This new license would enable a bar to serve beer and wine exclusively thus furthering the awareness quotient.

So, all in all, times are not all that bad. If you have already been in touch with an importer we suggest you try and take things forward. I hope this has been useful. I look forward to your queries or random extremely large sums of donations.

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