A latest study suggests that wine production in India - though still at a nascent stage - is likely to reach 18 million litres this year and 21 million litres by the year 2018. The annual wine production of the country stood at an estimated 17 million litres last year. The year-on-year growth rate has clocked five per cent, concluded a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said.
"Clocking a CAGR of about 20 per cent, wine consumption in India is likely to reach 22 million litres this year and about 37 million litres by 2018 from the level of 18 million litres as of 2014," the study said. Major wine producers in Europe are likely to set up their manufacturing facility in the country considering it a lucrative market, said the study titled 'Wine industry in India: Case of growth versus challenges.' Besides, wine imports are also likely to rise from this year onwards to meet the growing shortfall, it said.
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"Rising youth population together with growing affluence amid middle-class, penchant for exotic tourism and other related factors are likely to push the growth of emerging wine industry in India," D.S. Rawat, Secretary General of ASSOCHAM said, while releasing the findings. "It is a misconception that wine is an 'elite drink' and is not for common public but only for city dwellers...as such there is a need to spread awareness against this notion to promote wine culture across other cities and towns in India," he said. "This is a major challenge limiting the wine consumption in India," the study prepared by the ASSOCHAM Economic Research Bureau (AERB) said.
The number of estimated potential wine consumers in the country is placed at 26.5 million as of 2015--only about 20 per cent of India's total population. Poor storage and refrigeration, lack of transport facilities, dearth of wine promotional activities, prohibitively high prices of foreign wines, heavy taxes on domestic produce are other key challenges being faced by the wine industry in the country, the study said.
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Besides, huge marketing costs, higher duty on alcoholic beverages, stiff competition amid domestic and imported wines are also hampering the growth of wine industry. In its study, ASSOCHAM has suggested that, the government, both at the Centre and in states, should do away with the "prohibitive tax" component and work towards a more rational tax regime. "State governments can selectively consider easing of taxes/excise duty on wine which caters to the taste of educated class," suggested the study.
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A lower (per unit) tax structure for wine will more than compensate through expected increased volumes on account of higher consumption, without any loss to the exchequer, it added.