Non Resident Indian Business Forum

• About this group
• Forums

• Home
• Groups
• Non Resident Indian Business Forum
• Forums
• India VS India
• India: Better Times for Foreign Spirits?

• 
  Amarendra Dhiraj    Group moderator

  The company name is only visible to registered members.

  India: Better Times for Foreign Spirits?

  Life can be cruel and unfair—well, that's a familiar lament on barstools the world over. And when it comes to India's $14 billion alcoholic drinks market, it's also a refrain common among foreign executives trying to sell spirits in India while coping with a sobering array of lofty import tariffs.
  
  Johnnie Walker Red Label blended Scotch whisky, for instance, sells in India for more than $63 a bottle. In contrast, Antiquity, an Indian brand from UB Group, the largest Indian spirits conglomerate—based in Bangalore—retails for as little as $11.
  
  The massive price gap owes everything to India's stiff tariffs on foreign-made spirits and wine products, which have depressed sales by foreign alcoholic beverage companies in one of the most effervescent markets in the world, and have triggered a high-profile trade flap. Both the European Union and the U.S. are pressing New Delhi and the World Trade Organization for some relief.
  
  Layers of Taxes
  
  Indian Prime Minister Manmohan Singh's government is considering the matter. On Mar. 7, Kamal Nath, India's Industry & Commerce Minister, hinted in New Delhi at possible tariff cuts on liquor imports to avoid what could emerge as a nasty dispute at the WTO.
  
  Wiping Away the Problem
  
  In November, 2006, the EU asked for WTO consultations to reduce tariffs. With no signs of change, early this week it threatened to seek help from the WTO's arbitration panel. Australia has also expressed displeasure.
  
  The matter is said to be taken up by the highest political authorities in India. In a media interview in New Delhi, Commerce Secretary Gopal Pillai said: "We have proposed to get rid of the additional customs duty completely. Just wipe it off." The government may also propose legislation for equal taxes for both domestic and imported spirits and wines in all 29 states in India.
  
  Bad for Local Brands?
  
  Also, domestic companies have developed so-called "Indian-made foreign liquor products" that are similar to foreign brands, but obviously don't incur tariffs, to meet demand at home for better products. That market is growing at 9% a year.
  
  But others, like Kapil Grover, a director of Grover Vineyards, are worried about the impact should New Delhi cede to demands by the U.S. and Europe. "It will destroy the new players," he says. A bottle of his premium red wine La Reserve sells for a little over $10 in the 4 million-liter-a-year Indian wine market.
  
  Meanwhile, foreign companies are trying to figure out ways around the import duties. Recently, London-based Diageo has been bringing Scotch into the country in bulk and then bottling the spirits in India. Its locally sold brand called Haig is now priced at an affordable $13.
  
  • 27 Mar 2007, 5:34 pm
  Amarendra Dhiraj wrote: > Life can be cruel and unfair—well, that's a familiar lament on > barstools the world over. And when it comes to India's $14 billion > alcoholic drinks market, it's also a refrain common among foreign > executives trying to sell spirits in India while coping with a > sobering array of lofty import tariffs. > > Johnnie Walker Red Label blended Scotch whisky, for instance, sells > in India for more than $63 a bottle. In contrast, Antiquity, an > Indian brand from UB Group, the largest Indian spirits > conglomerate—based in Bangalore—retails for as little as $11. > > The massive price gap owes everything to India's stiff tariffs on > foreign-made spirits and wine products, which have depressed sales by > foreign alcoholic beverage companies in one of the most effervescent > markets in the world, and have triggered a high-profile trade flap. > Both the European Union and the U.S. are pressing New Delhi and the > World Trade Organization for some relief. > > Layers of Taxes > > Indian Prime Minister Manmohan Singh's government is considering the > matter. On Mar. 7, Kamal Nath, India's Industry & Commerce Minister, > hinted in New Delhi at possible tariff cuts on liquor imports to > avoid what could emerge as a nasty dispute at the WTO. > > Wiping Away the Problem > > In November, 2006, the EU asked for WTO consultations to reduce > tariffs. With no signs of change, early this week it threatened to > seek help from the WTO's arbitration panel. Australia has also > expressed displeasure. > > The matter is said to be taken up by the highest political > authorities in India. In a media interview in New Delhi, Commerce > Secretary Gopal Pillai said: "We have proposed to get rid of the > additional customs duty completely. Just wipe it off." The government > may also propose legislation for equal taxes for both domestic and > imported spirits and wines in all 29 states in India. > > Bad for Local Brands? > > Also, domestic companies have developed so-called "Indian-made > foreign liquor products" that are similar to foreign brands, but > obviously don't incur tariffs, to meet demand at home for better > products. That market is growing at 9% a year. > > But others, like Kapil Grover, a director of Grover Vineyards, are > worried about the impact should New Delhi cede to demands by the U.S. > and Europe. "It will destroy the new players," he says. A bottle of > his premium red wine La Reserve sells for a little over $10 in the 4 > million-liter-a-year Indian wine market. > > Meanwhile, foreign companies are trying to figure out ways around the > import duties. Recently, London-based Diageo has been bringing Scotch > into the country in bulk and then bottling the spirits in India. Its > locally sold brand called Haig is now priced at an affordable $13.