The answers, unless otherwise stated, are based on the Vision Document prepared by Rabo India for the Ministry of Food Processing Industries, New Delhi. The complete document is available on http://www.mofpi.nic.in.

How fast is the Indian wine market growing? What is the rupee value of the Indian wine market?
Between 1998 and 2003, the Indian wine market, in volume terms, grew at a compounded annual growth rate of 20% per annum on a narrow base. In value terms, it grew by 25% per annum. The rupee value for the wine market is pegged at INR 2.6 billion (50 million euros approximately at current exchange rates).

What is the size of the imported wine market?
The value of wine imports is estimated at INR 300 million. To cash in on the low prices of bulk wine in the international market, players like Sula have attempted to bottle imported bulk wine locally. Recent changes in Maharashtra's excise policies have made the enterprise expensive.

Among wine categories, which sells more -- red or white?
Red wine is responsible for 39% of the wine sales around the country. Whites follow closely with 35%. Sparkling wines, which are still seen as celebratory drinks, accound for just 7% of the sales.

Among price segments, which is the most popular band?
The INR 200-600/1 litre bottle segment accounts for 67% of wine sales in the country. The Rs 800+ category commands 6% of the market. Wines below INR 200 account for 20% and those priced in the INR 600-800 range contribute 13%.

Which are the principal wine markets in India?
Wine is mainly consumed in urban India. Mumbai accounts for 40% of wine sales, followed by Delhi (15%), Goa (8%) and Bangalore (6%).

What is the import duty structure on imported bottled wine?
The basic duty on wines is 100% on CIF value. An additional duty of 75% (on CIF value + basic duty) is levied on wines priced less than US$25 per case. For US$25-US$40 per case wines, the additional duty is 50%. For premium wines priced at US$ 40 or more per case, the additional duty is 20%. On top of this heavy duty burden, imported wines are subject to label registration charges (the rates keep changing from state to state), state excise duties (the norms also vary from one state to another), and VAT or sales tax (again, the rates keep changing from state to state).

What is the import duty exemption granted by the Government of India to the hotel industry?
In June 2003, the Government of India allowed all hotels earning foreign exchange a duty-free import licence, whose value was pegged at 5% of their foreign exchange earnings in the three years preceding the year in which the licence was sought. The scheme is administered by the DGFT, or the Directorate-General of Foreign Trade, which functions under the Ministry of Commerce.
The Ministry of Commerce, in the subsequent year, extended this scheme to free-standing restaurants, but the value of the entitlement was limited to 20% of their international credit card transactions. This doesn't amount to much because most restaurants earn in rupees, even from foreign guests and tour groups, unlike hotels, which take only hard currency payments for rooms booked by international visitors.

How much land is under wine grape cultivation in India?
Of the 75,000 acres under grape cultivation, less than 2%, or 2,000 acres, is under wine grapes. Of these 2,000 acres, Maharashtra, the country's largest grower of wine grapes, has 1,800 acres. Karnataka accounts for the balance 200 acres.

How does the Indian market for wine compare with that of beer?
Figures compiled by the Economist Intelligence Unit show that Indians consumed 600 million litres of beer in 2002-03; of this, 4.4 million litres were imported. There are 36 breweries in India, but United Breweries (UB) is the country's leading brewer, controlling 33% of the market. Its leading brand, Kingfisher, alone accounts for one-quarter of the market. Beer consumption in India was valued at INR 12.7 billion in 2003 by the Centre for Monitoring the Indian Economy (CMIE).

Is the Government of India taking steps to delink beer and wine from alcoholic spirits?
A Joint Working Group headed by A.N.P. Sinha, a senior bureaucrat in the Union Ministry for Food Processing Industries has recently made a non-binding recommendation that wine and beer be given "preferential treatment". But the Group has to take a call on the degree of preference that will be granted to beer and wine after getting feedback from the industry.
The Group has recommended that wine be granted preferential treatment in terms of licensing of manufacture, along with sales tax and import duty concessions. Its other suggestion is that states and union territories must encourage wine parks and wine production units in their regions.

Does the Government of India discourage the import of foreign food items and alcoholic beverages?

As the Economist Intelligence Unit points out, import licence barriers have been gradually lifted and quantitative restrictions ended in April 2001. But the government continues to discourage imports with a variety of tariff and non-tariff barriers (although both are gradually coming down). Certain sensitive items, such as alcoholic beverages, poultry meat, raisins, rice, wheat and vegetable oils carry high import duties. Stringent labelling requirements are applied to many pre-packaged food products (and imported wine). Compulsory detention and testing of items is the norm.

Is the Indian middle class as big as it is made out to be? How big is the consuming class?

Low average income levels have prevented India’s huge population of more than one billion from becoming a lucrative market for consumer goods, says the Economist Intelligence Unit. The vast majority of the people are preoccupied with meeting basic daily needs. Even so, the existence of a large middle class, estimates of whose size vary from 25 million to 350 million, offers a huge potential for manufacturers and retailers.

India remains a predominantly agricultural society and is home to around 40% of the world's poorest people; even the much-vaunted middle classes have limited disposable income. As a result, the early enthusiasm of foreign companies eager to tap India's large market has been replaced by a more sober assessment of potential sales. The market for branded consumer goods such as clothing, colour television and washing machines is now estimated to be just 50 million to 75 million. Demand for large or even medium-sized cars is tiny. Better-quality products certainly appeal to India’s consumers, but price remains the major determinant.

Figures released by the National Council of Applied Economic Research, an independent research organisation, show that in 1999-2000 India had about 176 million households; of these, only around 6.2 million earned more than Rs140,000, or around US$3,100, a year (at 1998/99 prices), and could therefore be considered to be affluent.