After undergoing the usual procedure that culminated in the appropriate legislation passed by both Houses of Parliament in Canberra on 22 November, 2022, both the Australian and Indian governments confirmed in writing on November 29 that they had completed their respective domestic requirements, and a waiting period of 30 days, the AI-ECTA Agreement will become effective with effect from 29 December, 2022, by far the fastest Treaty brought into force, in India.This being the first major Treaty signed after 2008 when the duties became a steady 150 % (minor procedural changes notwithstanding), this is the first time that customs duties would come down in India in 14 years. This would give a definite edge to premium Australian wines.

When the Agreement becomes operative on 29 December, 2022, Australian premium wines with an export price of more than US$15 per bottle will have to pay 50% of the current import duty of 150%. This will be followed by an annual tariff reduction with the final tariff rate of 25 per cent after 10 years. (In our earlier reporting it was not clear whether the dollar implied a US or the Australian counterpart-editor)

Also Read : Australia Parliament ratifies Indo Australian FTA (ECTA)

Similarly, mid-range Australian wines will also benefit to a lesser extent with wines priced between US$5-15 enjoying the tariffs reducing to 100 per cent immediately, and similar grading down to 50 per cent after 10 years.

With the burgeoning, young, professional class in India with increased drinking and changing tastes, wine drinking has been gaining social status, and there is growing demand for premium wines.

According to Torbreck Vintners (Torbreck), one of South Australia’s most acclaimed wine producers in the Barossa Valley, “India is a sleeping giant. There’s a new middle class. And there is also a growing professionalism in India in terms of the skills needed to handle high quality wines. We thought, “one day there could be a trade agreement: if that happens, we will give it another go.”

Also Read : Wine Australia: The Aussies are Coming!

As Sacha Timaeus, Export Manager of Torbreck says, “We will be the first cab off the rank in terms of easier access to India’s wine market. The tariff reduction will give Barossa wines a real competitive edge over wines from Europe and South America.”

Torbreck had been exporting their iconic wines through Sonarys India but discontinued because of dwindling sales- the customs duties at 150% and the resultant higher excise duties and VAT, they stopped selling to India as David Powell, who founded the company in 1994 but parted company in 2013, had told Subhash Arora at a Tasting at the World Wine Symposium at Villa d’Este in 2011. Currently they have another distributor with whom they claim they are fully satisfied.

Australia also gets the MFN (Most Favoured Nation) status which means that if the EU can negotiate a better tariff reduction in the ongoing Indo-EU FTA, Australia will get further benefits from that Agreement.

Also Read : Australian Wines to get Cheaper in India with FTA signed Today

Austrade helps project Australian wines

Australian trade officials have been already working with Austrade advisers to build an appreciation of Australian wine in India and have accelerated their plans to promote premium wines with several programs planned for Delhi, Mumbai and Bangalore to start with during the next couple of years.

John Southwell, Trade Commissioner, Mumbai who was at Prowein and Vinexpo India, the two leading wine and spirits Shows in India, reportedly says, ‘We are already in a great position. Australian labels currently deliver 44 percent of imported wine in India, but we can’t rest on our laurels. We work with consumer groups and the hospitality sector to showcase the depth and sheer diversity of Australian premium wines.” (A big majority of this share is hogged by the ubiquitous Jacobs Creek which is the largest selling imported wine brand in India-editor)

Also Read : FTA: Australia- India set Ambitious Target of December 2022

Taking a cue from the date of enforcement, there were several enquiries at the recently concluded Vinexpo India at Delhi on December 1-3 and Fishbone Wines-a producer from Western Australia already participated with satisfaction about the business potential.

Australian producers appear to be a bit too optimistic on the anticipated level of sales increase-certainly India cannot replace China as the big importer for at least the next couple of decades. But undoubtedly, the methodical, focussed approach will bring rich dividends to the industry, particularly when the treaty has been used with full impact- even Australia had benefitted tremendously when the imports in China became tax-free a few years ago. Unfortunately, political differences between Beijing and Canberra during Covid brought Australian wineries almost to their knees.

John Southwell is aware of the Indian market and tells FoodMag.com.au, “Australian wineries seeking to take advantage of the AI ECTA need to be patient and persistent. India is a long-term play and those that stay the course, tell their story and are able to work across price segments will benefit”.

To that we say, ‘Hallelujah’!

Subhash Arora