India Wine Industry Report Essay

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India Wine Industry Report

CONTENTS Introduction Market Size Market Development Local Industry Duties and Taxes Australian Wine players in India Market Segment and Market Share for imported wines Duties and Price Structure Wine Duty calculation impact on retail price Pricing factors The Developing market Market Entry Strategy Further Information Annexure I – Map of India Annexure II – Useful Information Annexure III – Major Wine Importers in India Annexure IV – list of other wine Importers and Distributors in Mumbai Delhi Bangalore and Goa Annexure V – Press Clipping PAGE NO 3 3 3 -4 4 5 5 5-6 6 7 8 8 8-9 9 11 12 13-16 17-19 20 -21.

Disclaimer: Whilst every care has been taken in compiling the information in this report, the Department of State Development and its contractors neither warrant nor represent that the material published herein is accurate or free from errors or omissions. To the extent permissible by law the Department of State Development and its contractors shall not be responsible or liable for any errors, omissions and misrepresentations made herein. 2 Introduction: The Indian wine market is in a nascent stage. Estimates suggest an enormous growth potential of this sector both from the indigenous wine making industry and imports.

The wine market in India is mainly fuelled by the strong growth in the domestic wine production, but imported wine plays a role in creating awareness and increased demand. Like most products in India, wine is extremely price sensitive. Market Size: As an emerging market India has great potential for wines, with an annual growth rate of 30% albeit from a low base. However, per capita consumption of wine in India is still low compared with other Asian markets. It was estimated that during the financial year 2008/9 the overall size of the Indian wine market was around 1. 2 million cases, of which 210,000 cases comprised imported product.

This is small when compared with other beverage products. For example, there are an estimated 210 million cases of spirits consumed each year, of which 100 million are cases of beer. The fortunes of the industry are linked to the changing drinking habits of Indians with higher disposable incomes, foreign tourists and visiting business people, and Government (Central and State) regulations and policies that govern the industry. Market Development: Use of the mass media to promote alcoholic beverages in the form of advertising in magazines, TV, radio, newspapers, or on street hoardings is not allowed in India.

However in-store advertising or on-premise promotions are allowed in all states except Delhi. In should be pointed out that wine shops differ widely from those in Australia. Marketing strategies have to include other forms of promotion such as promoting awareness on the relative health benefits of drinking wine, and sponsoring appropriate events which are cost effective and targeted towards those socioeconomic groups that can afford wine. The market demands a lot in terms of creating awareness, education and demystifying wine as a product.

This can help expand the consumer base and increase demand. Companies wanting to successfully access the Indian wine market need to develop a long-term strategy that includes developing appropriate marketing promotions and educating agents, distributors and consumers about the product and the brand. Ongoing support of agents and distributors is required both on a financial basis (e. g. supporting promotions and marketing activities) and on a personal level. Increasing awareness of wine as a separate drink other than spirits has made it more socially acceptable.

Increasing health consciousness and higher spending on corporate and personal entertainment has also given a boost to the sector. The increasing awareness of Government authorities to encourage wine drinking as compared with spirits has certainly brought cheer to the companies in the sector. The perception of wine being “upmarket” and “sophisticated” is helping in bringing about this change. One sign of this happening is the emergence of wine clubs in a number of cities. The biggest consumption of wine (up to 80%) is confined to the major cities, of which the largest are Mumbai (39%), Delhi (23%), Bangalore (9%) and the foreign tourist.

3 dominated market of Goa (9%). With the easing of quantitative restrictions on wines after April 1, 2001, there has been an increasing interest in the Indian market by international players. However the import duties and state taxes (which will be discussed later in more detail) remain high. They continue to be a major impediment to the foreign entrants into the Indian market. Local Industry: Maharashtra, Karnataka and Himachal Pradesh (a recent entrant) are the three major wine producing regions in India.

Maharashtra, on the western coast of India, is the major wine-producing region, accounting for 94% of the total wine produced in the country. According to the Department of Wine Production of the Maharashtra Industrial Development Corporation (MIDC), the wine producing region is spread over 30,000 hectares, covering 64 wineries. During the year 2007/08 Maharashtra registered a massive growth in wine production to 21. 1 million litres against 13. 2 million litres in 2006/07. This was a growth of 60% over the previous year and illustrates the ongoing appreciation of the virtues of wine by Indian consumers.

Six new wineries became operational in Maharashtra, taking the total investment in the state to A$89 Million producing 720,000 litres of wine. The major grape producing regions in Maharashtra are Nasik, Satara, Sangli, Ahmednagar, Pune and Osmanabad, which are located approx 180-300 kms northeast and south of Mumbai. Thirty wineries have established production and bottling plants in the Vinchur industrial estate near Nasik. Karnataka produced 1. 2 million litres of wine during the same period. Two of India’s leading brands, Grover Vineyards and Indage, have plans to set up wine production facilities in Himachal Pradesh.

There are three major local producers who control more than 90% of the market. Their market shares are as follows: Domestic Players Grovers Vineyard Chateau Indage Sula Vineyards 2004-05 37% 49 % 14 % 2005-06 26% 38% 36% 2006-07 24% 36% 34% 2007-08 22% 35% 35% Some of the statistics of domestic and imported wine sales in India are as follows: 2003-04 2004 -05 2005 -06 Domestic 430,000 490,000 535,000 Imported 40,000 70,000 100,000 Total Cases 470,000 580,000 635,000 (Figures sourced from Wine Report by MIDC) 2006-07 940,000 140,000 1,080,000 2007-08 1,000,000 210,000 1,210,000.

During the last year United Sprits Ltd (USL), part of UB Group, bought BouvetLadubay, a French winery, and has launched this brand on the Mumbai, Delhi, Bangalore, and Goa markets . USL intends to produce wine in India. Their plans are to produce up to 600,000 cases per year. India has also exported a small volume of wine to Canada, Singapore, UK, and USA. 4 Duties and Taxes: The import duty on bulk wine was zero from 2001 till 2003/04. In the year 2004/05 the duty for wine imported in bulk was raised to the same level as that of imported bottled wine.

Simultaneously, the state excise duty on bulk wine which was Rs7 per litre was raised to Rs200 per litre, and later to 200% of CIF value. Hence the concept of bulk wine being imported then bottled in India is no longer feasible. The major wine imports have been from France, Italy, Australia and Spain. There is a growing interest in wines from Austria, Italy, South Africa, Argentina, New Zealand and Chile. According to International Wine & Spirit Research (IWSR), 39% of the total wines imported into India have come from France, 24% from Italy, and the rest from the other countries listed.

Australian Wine players in India: Some Australian wine companies that have entered the Indian market during the last 7 years include: Howling Wolves of Western Australia, who have been marketing wine in Mumbai since 2004. The former Premier of Western Australia, Dr Geoffrey Gallop, launched their wine in Bangalore in October 2005. Smith Brooke of Margaret River, Grant Durge, St. Hallett and Thomas Mitchell of South Australia, and Pikes, Victor Precie and Stonier of Victoria have tied up with Echidna Wine Traders to market their wines in India. Xanadu and Cape Mentelle from Western Australia are also being marketed in India by Fine Wines & More and Moet Hennessey.

BRL Hardy has a distribution arrangement with Sula Vineyards of Nasik. Additionally well known Australia brands such as Oxford Landing, Yellow Tail, Jacobs Creek, and Tyrell are readily available in India. Market Segment and Market Share for Imported Wines: In India, there are two major market segments through which imported wines are sold. These are: the hospitality sector the retail sector The hospitality sector consists of 4 and 5 star hotels and upmarket restaurants and currently accounts for up to 63% of sales for imported wines.

The hotels normally buy wine from importers and distributors as opposed to importing the wines directly from producers due to the logistics and economies of scale. The retail sector accounts for 30% of sales of imported wines. Currently there are ten Indian states that allow the sale of imported wines through retail stores. These are Punjab, Haryana, Chandigarh, Karnataka, Maharashtra, Goa, Uttar Pradesh, Madhya Pradesh, Jharkhand, Himachal Pradesh. The union territories of Pondicherry and New Delhi also allow the sale of imported wines through retail stores.

The sellers are granted a permit and license according to the policy of the respective state. In the 5 states other than those mentioned above, the sale of imported liquor (including wine) through retail outlets is not permitted. However 4 and 5 star hotels in these states are allowed to buy bottled wine against a duty free license. The states of Tamil Nadu and Andhra Pradesh do not allow the sale of imported wines, while the state of Gujarat prohibits sale of any wine or liquor through retail outlets.

Import duty, local taxes and Price Structure: The Central Government levies import duty, in addition to which each State Government further impose their own taxes on imported wine. The taxes levied vary from state to state. They are complex and keep changing on a fairly regular basis. Because of the complex tax structure and permit regulations it is very hard for a distributor in one state to sell the product to buyers in another state. Hotels and restaurants, under the duty free scheme (a certain percentage of their foreign exchange earnings can be used to offset import duty on imported goods, including wine) are at an advantage. However, the volume imported under this arrangement is still small.

It is to be noted that 75% of the imported wines are sold in 4 and 5 star hotels. Each state has different levels of taxation as well as varying labelling requirements, types of labels, fees for registering labels, etc which need to be adhered to. Wine exporting countries, including Australia, have, through their High Commissions and Embassies in India, been making representations to the Indian Government with the support of local producers to streamline the taxation structure and labelling requirements.

This has been a slow process and scant progress has been made. Duties and taxes are the major impediment to the growth of the wine market in India. The following examples illustrate the complexity of the problem. In Delhi the tax/duty on wine is at a uniform rate of Rs200 (A$5. 50) per litre from January 2008. In Karnataka state (Bangalore) the current tax is Rs630 (A$19) per case of 9 litres. In Andhra Pradesh (Hyderabad) the tax on wine is based on the alcohol content as well as on volume. The effective rate of duty amounts to Rs90 (A$2. 80) per litre.

Under the WTO agreement and pressure from the US and EU countries, the Government of India announced the reduction in basic duty from 150% to 100% effective 3 July 2007. However the states increased the excise duty, which not only impacted the pricing level in retail sales but also made it extremely tough for imported wine to enter the market. Industry associations have taken up this matter with the Government and changes are expected in the near future. The following table is an example of the calculation of wine duties and tariffs as charged by the Federal Government and that by the State of Maharashtra and Mumbai.

It also shows the impact of such duties on retail pricing, which is marginal in spite of the reduction in the basic import duty tariff. Maharashtra, the largest producer and consumer of wine, has been increasing taxes on imported wine in order to protect the local industry. 6 There is also significant change in duties on liquor and wine in the state of Goa and Karnataka. Please see Annexure VI for further details. 7 Current wine duty calculation that impact on retail prices Duty Paid Scheme Brand Brand Brand 1 2 3 24 35 45 Duty Free Scheme Brand Brand 2 1 24 35 CIF in US$/case * Eqvt in INR 1!

$=40 Add Landing Fee 1% (AV) Basic Duty 150% Sub Total CVD 4% Total Landed Maharashtra Excise 200% of AV Sub Total Octroi 7. 2% Total Gross Margin Ex warehouse Sale Price Wholesale Margin 12% Wh Selling Rate Retail Margin 12% Consumer Price Consumer Price /Bottle VAT Total Total Taxes Taxes as % of CIF CIF in US $ Brand 3 45 960 969. 6 1400 1414 1800 1818 Eqvt INR Add In Bond Transfer Fee 2% Add Landing Fee 1% AV 960 979. 2 1400 1428 1800 1836 1454. 4 2121 2727 988. 992 1442. 28 1977. 98 2884. 56 320. 41 467. 27 2000 2000 5258. 4 6751. 83 1854. 36 3708. 72 600. 77 2000 8109. 49 2414. 4 3521 4527 Excise Duty 96.

58 140. 84 181. 08 Octroi 2510. 98 3661. 84 4708. 08 Gross Margin 1939. 2 2828 3636 Ex Warehouse 4450. 18 320. 41 4770. 59 2000 6489. 84 467. 27 6957. 11 2000 8344. 08 600. 77 8944. 85 2000 Wholesale Margin Ex Wholesale Price /Bottle Total Taxes 631. 008 5889. 4 490. 784 2298. 4 239% 810. 2194 7562. 05 630. 1707 3351. 83 239% 973. 139 9082. 63 756. 886 4309. 49 239% 6770. 59 8957. 11 10944. 9 Taxes as % of CIF 812. 47 1074. 85 1313. 38 12258. 2 7583. 06 10032 909. 97 1203. 84 1470. 99 8493. 03 11235. 8 13729. 2 707. 75 141. 55 849. 3 3810. 59 397% 936. 32 187. 26 1123. 58 5557. 11 397% 1144. 1 228.

82 1372. 92 7144. 85 397% Please note the above is a guide only. Taxes and duties are subject to change without notice. Exporters must check the duties and tariffs before concluding any sale/contract. 8 Pricing Factors: Going by the calculation shown in the table above, the retail price for wines goes as high as 500% of the CIF value for bottled wine. It is still higher in most 4 and 5 star hotels and upmarket restaurants due to the higher margins they are able to obtain. In Indian hotels and restaurants imported wine is sold upwards of Rs2200 (A$60) per bottle, with premium wines sold at higher prices.

Up to 70% of imported wines are sold through retail outlets at Rs1200 (A$35) upwards per bottle. There is also a one off label registration fee that has to be paid in each State the wine is to be sold. The fee is calculated on the maximum retail price and varies from State to State. For example in Goa the label registration fee for a bottle of wine that retails for between Rs. 2000-5000 is currently Rs45,000. The Developing Market: According to the Exim Bank Survey it is conservatively estimated that 10 million Indians (around 1% of the population) could be termed as potential consumers of imported wines.

They would come from the upper/middle class socio-economic groups. The profile of wine drinkers has changed in the past five years. This is due to the fact that many Indians have travelled overseas and have been exposed to a variety of wines. They have started regarding wine as a beverage with health benefits rather than as an alcoholic beverage. Women, too, are increasingly choosing wine as a beverage of choice as it has a certain sophistication attached to it. Wine is also being used more special promotions, product launches etc.

Despite challenges such as high duties, complex state taxes and laws, and poor infrastructure and logistics, the market is growing at a healthy 30% per annum. As a result most of the leading Indian alcoholic and beverage companies have started firming up their portfolios to include wine (local and imported). Market Entry Strategy: Exporters need to take a long-term approach in developing their strategies to access the Indian market. Although India is a steadily growing market, it is extremely price sensitive.

Exporters should establish their own importing company, fund the import costs, and provide long term marketing budgets with dedicated sales and marketing staff. In order to succeed it is vital for the exporter to choose an agent or distributor who has a good knowledge of the local market and can effectively communicate with concerned parties, and in particular someone who understands the complex regulations that apply to imported wines. Because of the constraints on advertising wine in India an effective strategy for marketing has to entail a close working relationship with the agent and distributor.

The exporter is expected to provide the advertising and promotional material as well as bear the expenses incurred for promotions, tastings etc unless otherwise agreed. Therefore, all expectations of the agent and distributor need to be agreed upon before any formal arrangement is concluded. The brands may target either retail outlets or hotels in order to develop brand identity. High end wines are usually positioned only in the premium segment of 5 star hotels and comprise limited volumes. 9 A focussed approach, with an emphasis on marketing as opposed to sales, is the need of the hour.

This approach would help in brand development and brand recall. The company would need to earmark a capital budget in the first 2-3 years for marketing towards brand establishment and development. Till date no major importer has been able to focus on brand development as they have to sell a number of varieties in order to expand their clientele It is an established fact that in times of recession, the sale of alcoholic beverages and chocolates (in Europe) increases. However, the focus shifts from consumption “on premise” to “off premise” and volumes of entry level products increase.

Hence the current global and India market scenario lend credibility to the suggestion of establishing a marketing company in India. This company could respond to changing market dynamics more swiftly by shifting focus from high end wines to entry level wines and focussing on retail/individual buyers. For further information on the opportunities for wine in the Indian market, please contact the Western Australia Trade Office – India.

10 ANNEXURES 11 ANNEXURE I MAP OF INDIA 12 ANNEXURE II Major Trade Events: INDSPIRIT 30-31 October 2009, The Renaissance Hotel, Powai, Mumbai www. ambrosiaindia.com Indian International Wine Fare December 2009 www. iiw. com International Food Expo December 2009 www. ife-india. com India International Food and Wine Show, January 2010 New Delhi www. ifows. com International Hospitality Fair- February 2010 www. internationalhospitalityfair. in Useful Links: www. indianwine. com www. indianwineacademy. com www. sommelierindia. com www. thewinesocietyofindia. com www. thewinesociety. org www. fwmclub. com Useful Industry Contacts: Mr Subhash Arora, President Indian Wine Academy A-458 Defence Colony New Delhi 110024 Mbl: 09818368428 Email: [email protected] www. indianwineacademy. com.

The Academy produces a weekly newsletter which can be obtained through their website. Dr Jaideep K. Kale Technical Co-ordinator Grape Wine Park, MIDC, Jog Center, 2nd Floor, Wakdewadi, Pune-411 003. MAHARASHTRA (INDIA) Mobile : 09823381014 Tel. No. 020-25819444/445, Fax No. 020-25819446 E-mail: [email protected] org Mr H R Ahuja Director Win Wine & Beverages Pvt. Ltd. B-204, Rajrudram, Gokuldam Film City Road, Goregaon (East) Mumbai 400063 Tel: 91 22 2840 9194 Email: [email protected] com [email protected] com.

Ms Rogita Tiwari Associate Editor Ambrosia 13/D, Laxmi Industrial Estate New Link Road Andheri (W) Mumbai 400053 Tel. 91 2229358083 Email: [email protected] vsnl. net. in www. ambrosiaindia. com 13 ANNEXURE III MAJOR WINE IMPORTERS Although there are probably more than 100 importers in India, the following are the major companies: Brindco International: Based in Delhi, is reported to have imported around 25,000 cases of wine. They currently have arrangements with approximately 60 wineries from eleven countries including: Baron Philippe de Rothschild, E.

Guigal, Albert Bichot and Louis Jadot (France) Allegrini, Marchessi di Barolo and Gaja (Italy) Joseph Phelps, Francis Coppola (California) Leeuwin Estate, Wolf Blass and Peter Lehman (Australia) Brindco is a key vendor to some of the top hotel chains in India including Taj Hotels and the Welcome Group. Mr. Aman Dhall Managing Director Brindco Sales Limited S35 Okhla Industrial Area Phase 2 New Delhi. 11 00 20 Tel: 91 11 4161 6424 Fax: 91 11 26 38 8818 Mobile: +9198100 72050 E-mail – [email protected] Sonarys Co-Brands:

The company imports approximately 20,000 cases of wine per year and assembled a good portfolio of 350 labels from over 45 wineries in 11 countries. Some of the brands Sonarys handle include: Arrowwood, Clos du Val and Robert Mondavi (California ) Montes (Chile) Falvey, Hugel et Fila, Domaine Laroche and Pascal Jolivet (France) Antiori, Umberto Cesari, Micael Chirlo and Prunetto (Italy) The company has established good connections with most of the upscale tourist hotels in the major cities. Mr Sanjay Menon CEO Sonarys Co-Brands Pvt. Lt.d, 12 Creative Industrial Estate NM Joshi Marg, Lower Parel, Mumbai. 400 022.

Tel 91 22 5666 9111 Fax 91 22 5666 9100 E-mail – [email protected] com Web: www. sansula. com 14 Global Tax Free is a family business based in Delhi and import approximately 15,000 cases per year. Their portfolio includes: Taylor’s (Australia) Trivento (Argentina) Concha y Toro of Chile (Chile) Casa Givelli Cassetta and Fontella (Italy) Laurent Premier Jean Claude Boisset , Joseph Droubhin, Rene Barber and Calvet (France) KVW (South Africa) Mr Mukul Mehra President Global Tax Free Traders Inc 87 Sainik Farms, Central Avenue New Delhi.

110 062 Tel: 91 11 6597 9222 Fax: 91 11 2955 2574 E-mail: [email protected],com Web : www. globaltaxfreetraders. com Moet Hennessy: Based in Mumbai, Moet Hennessy are importing in the region of 10,000 cases per annum. Their portfolio largely consists of wines from wineries owned by their parent company, LVMH. They also represent: Terrazas (Argentina) Casa Lapostolle (Chile) Green Point and Cape Mentelle (Australia) Cloudy Bay wines (New Zealand) Mr Ashiwini Deo Moet Hennessy (Cape Mentelle) 501 E, Dr A B Road Worli Mumbai 400025 Mbl: 98213 12556 Email: ashwin. [email protected] moet-hennessy.com Sovereign Impex;

The Delhi based importer’s current portfolio includes: Vakdivieso and Santa Ema (Chile ) Lungaroti, Pio Cesare, Fotonari and Mastroberardina(Italy ) Wildekrans Wine Estate (South Africa) Mr Naresh Uttamchandani Sovereign Impex Pvt. Ltd. , C. 15 Safdarjang Dev Area (2 Floor), New Delhi 11 00 16 Email [email protected] com Mobile 91 98110 42416 Web: www. sovereignindia. com 15 Sula: Although one of the top Indian wine producers, the company also imports approximately 10,000 cases per year. To date they have focused on importing brands produced by the Constellation Group.

The following are currently sold in India: Two Oceans ( South Africa) Hardy’s (Australia) Trimbach, Forrtant and JC Le Roux (France) House of Ruffino (Italy) Sho Chuku Bai (Japan) Mr Rajeev Samant, CEO – Sula Vineyard Samant Soma Wines Pvt. Ltd 1 & B2 Matulya Centre C Senapati Bapat Marg, Lower Parel, Mumbai. 400 013 Tel 91 22 6660 6685 Fax 91 22 2492 6064 Mohan Bros: Mohan Bros supplies wine to the diplomatic corp as well as duty free shops and ships chandlers. Mr Rohit Mehra Partner Mohan Bros. Pvt. Ltd. , Plaza Cinema Bldg (2 Floor) Connaught Place, New Delhi.

11 00 01 Tel 91 11 4151 3434 Fax 91 11 4151 636 RR International: is another supplier of wine to embassies, airport duty free shops, airlines and ships chandlers. They also supply hotels and have boned wharehouses in Delhi and Mumbai. Mr S Garg Director RR International B. 90A Greater Kailash I, New Delhi. 11 00 48 Tel 91 11 2643 1058 Fax 91 11 2623 8354 Munjal Bros. is the Indian agent for Castel and Pernod Ricard of France. Mr Harminder Singh Munjal Director Munjal Bros Pvt. Ltd. , 356 Pappargaj Industrial Estate New Delhi 11 00 92 Tel 91 11 2216 9289 Fax 91 11 2216 9288 16 Aspri Spirits also import wine as well as spirits.

They are the Indian agents for Absolut Vodka. Their wine portfolio includes De Bortoli ,Sacred Hill and Windy Peak (Australia) Campari and Cinzano (Italy) Contact details Mr Arun Kumar, Aspri Spirits Pvt. Ltd. , N230 Ground Floor Greater Kailash I New Delhi. 11 00 48 Tel 91 11 4163 3981 Fax 91 11 4163 1713 Mob 91 98104 43440 E-mail [email protected] org Web – www. aspri. org 17 ANNEXURE IV LIST OF OTHER WINE IMPORTERS AND DISTRIBUTORS A) MUMBAI Mr Ranjit S.

Chougule Chief Operating Officer Champagne Indage Ltd 82, Indage House Dr A B Road Worli Mumbai 400 025 Tel: 91 22 24938718 Fax: 91 22 24913435 Email: [email protected] Ms Dharti Desai Founder Fine Wines N More 406, Raheja Plaza, Plot 15/B Parksons Press Compound Off new Link Road Andheri West Mumbai 400053 Tel: 91 22 4033 0000 Fax: 91 22 4033 0100 Web: www. finewinesnmore. com.

Mr Bruno Yvon National Brand Manager India Clicquot Asia 88 Maker Tower, 8th Floor Cuffe Parade Mumbai 400 005 Tel: 91 22 2218 1039 Fax: 91 22 2218 0801 Mr Darren Centofanti Managing Director Pick of the Bunch 402 B Wing, Haripreet Building Tagore Road Santacruz (W) Mumbai 400054 Tel. No. 91 22 26494114 Email:[email protected] com www. pickofthebunchwines. com

Mr Vishal Kadakia 47A, Nandjyot Industrial Estate Andheri Kurla road Mumbai 400 072 Tel: 91 22 28516621 Fax: 91 22 28516626 Mbl:9820858618 Email:[email protected] com Web: www. thewinepark. com Mr Vishnu G Dev Director South Seas Distilleries & Breweries Pvt Ltd Old Chinoy Bldg, 275 E, Tardeo Road Mumbai 400 007 Tel: 91 22 23876068 18 (B) NEW DELHI Mr Narottam Sharma Materials Manager – Corporate Hyatt Regency Hotel Bhikaiji Cama Place, Ring Road, New Delhi 110 066 Tel:9111 26791234, 26791150 Ext. 1422; Fax. : 91 11 26791122, Mobile : 91 9811011160 Email : [email protected] vsnl. in.

Mr Bill Marchetti Executive Chef ITC Maurya Sheraton & Towers Diplomatic Enclave, New Delhi 110021 Tel. : 91 11 26112233; Fax. : 91 11 26113333 Email : [email protected] com. au Mr N. K. Piplani General Manager I. T. D. C. Duty Free Shops International Trade Division, 504 5th Fl. Jeevan Vihar 3 Sansad Marg, New Delhi 110 001 Tel: 91 11 32740895; Fax:

91 11 23341459 / 32740895 Email: [email protected] com Web. : www. theashokgroup. com Mr Sanjiv K. Singh TT & G Trading Private Limited Managing Director Thapar House 124 Janpath New Delhi 110001 Tel. : 91 11 23361369, 23349030; Fax. : 91 11 23349029 Email. : [email protected] Mr Raja Mukherji, Head – International Brands Radico Khaitan Limited Plot No. J 1, Block B 1, Mohan Co-op. Industrial Area Mathura Road New Delhi 110 044 Tel: 91 11 26975403-09; Fax: 91 11 26975339-40 Email :

[email protected] vsnl. net. in Web. : www. radicokhaitan. com Ms Firdaus Khan-Chowdhury Mr. Mathieu Villard Directors Francis Wacziarg Group A 50 Nizamuddin East, New Delhi 110013 Tel. : 91 11 24355910, 24355901, 24355920; Fax. : 91 11 24351112 Email. : [email protected] com Web. : www. fwacziarg. com Mr B. K. Pardal CEO Global Brand Management India 65A Pocket 14 Himgiri Apartments, Kalkaji Extension, New Delhi 110 019 Tel.: 91 11 26091993; Fax. : 91 11 26093272 Email : [email protected] net Mr Peter Schatzmann Corporate Director -Food & Beverage The Oberoi Hotels New Delhi Tel: 91 11 2389 0594 Fax:91 11 2389 0590 Email: [email protected] com 19 (C).

BANGALORE Mr Abhay Kewadkar Chief Wine Maker United Spirit Limited, 51, Richmond Road, Bangalore – 560025 India Tel: 91 80 30510600 Email: [email protected] com Mr Ashwat Rashwat Reddy M/S Saptagiri Enterprises 683, 50ft Road, 3RD Block, 3RD Stage BSK Bangalore 560085 Tel (MOB) +91 9844001145, Off: 91 80 6791 988, Fax: 91 80 6793 504.

Mr Prabhu Yalagi Managing Director Castello Farm Products P Ltd. 257, Hosur Road Wilson Gardens Bangalore 560 027 Tel. No 91 80 56690251 Mr Raja MukherjiHead International Brands Radico Khaitan Pvt Ltd 1203, Regent Chambers Nariman Point Mumbai 400021 Tel: 91 22 56359845 (D) GOA I Mr Fransico Montecruz Director Impala Distilleries & Brewery Ltd 33, Amonte New Market, Margaon, Goa Tel: 919822388144,9822101149 Tel: 91832 2705339 Mr Alto Mundo Alto Mundo Vinhos Impex Pvt Ltd G-3, R-12,, Techno Park, Chogum Road, Porvorim, Goa – 403521 Tel: 91-9324938638, Email: [email protected] com.

Mr Mario de Sequeria Partner Tonia Agencies Raicho Ambo Raia Salcete Goa 403720 Tel: 91 832 2740187 Mb:09822102182 Mr Antonio De Silva Partner Royal Spirit Satt Adhar Arcade, Peddem, Mapusa (Mapuca), Goa 403507 Tel: 91 832-6516185 20 ANNEXURE V Posted: Friday, October 31 2008. 9:50 India Loses Case in WTO Appeal U. S. Trade Representative Susan C. Schwab announced in Washington yesterday that the World Trade Organization (WTO) Appellate Body has found in favour of the United States in its challenge against India’s additional and extra-additional duties on wine, spirits and other agricultural and manufactured products.

Indian Wine Academy has insisted all along that the additional duties charged were illegal, according to the WTO agreement. It now appears that India camouflaged the proceedings by not providing full details to the earlier panel and that helped its win the case filed by the US. EU had withdrawn its case after the government had waived Additional Customs Duties on July 4. 2007. However, US had stuck on with the case knowing the intricacies involved with the excised duty structure of states.

India had imposed these duties on U.S. imports in addition to and on top of its basic customs duty, resulting in combined duties on imports of alcoholic beverages (beer, wine and spirits) of up to 550 percent. India argued that the duties were permitted because they simply offset certain internal taxes (such as value-added taxes). The Appellate Body reversed the panel, which had found that any import charge offsetting an internal tax need only “serve the same function” as the internal tax and need not be equivalent in amount to that internal tax.

In reversing the panel, the Appellate Body agreed with the United States that any import charges aimed at offsetting internal taxes cannot result in a higher amount being charged to imports than to like domestic products. “This is an important decision for all WTO Members, particularly at a time when they are negotiating tariff commitments,” said Ambassador Schwab. “The Appellate Body reversed a deeply flawed panel report and reaffirmed a fundamental WTO rule that Members cannot impose duties on imports that exceed their tariff commitments.

” After the United States initiated the dispute, and in response to U. S. concerns, India announced the withdrawal of the additional duty on alcoholic beverages and modifications to the extra-additional duty, which it represented to the panel eliminated any discrimination against U. S. imports. We continue to have concerns about whether these measures have eliminated India’s abusive use of additional tariffs, particularly given India’s refusal to produce information to support its claims that the duties merely offset internal state-level taxes.

We continue to closely monitor the effect of both actions. The Appellate Body considered that the additional duty on imports of alcoholic beverages and the extra-additional duty on imports of alcoholic beverages and other products would not be justified as offsetting excise duties and other internal taxes on like domestic products insofar as the duties result in charges on imports that exceed those on like domestic products, and consequently, that this would render both the additional duty and extra-additional duty inconsistent with India’s tariff commitments.

The Panel’s interpretation would have opened a Pandora’s Box by inviting the widespread imposition of “additional” tariffs in violation of WTO commitments. Unfortunately, because of India’s refusal to provide information to the panel on its internal taxes – including in response to direct quest.

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