India imported more cases of bulk wine than labelled wine from Australia in 2010. But why are importers tight-lipped?

According to a recent article in an Australian trade publication, Wine Australia, India imported around 66,000 cases of bulk wine from Down Under last year, almost thrice the estimated amount of bottled-in-origin (BIO) wines (which have the original labels from the exporting country) imported in 2010.

On the basis of the above article, Mr Subhash Arora, president of the Indian Wine Academy, has stated in his website that "the past several years have been continuously indicative" that has been a greater import of "bulk wine than bottled wine."

Mr Arora says in his website: "Import of bulk wine is a good way of saving costs of winemaking and Australia offers a wide choice."

But no producer in India is willing to admit that there has been such a huge quantum of bulk wine imports, writes Mr Arora.

So if wine producers are not importing these massive bulk quantities, then who is?

There lies the rub. In India, bulk wine can be imported on the payment of 150% customs duty of the Cost, Insurance & Freight (CIF) value, which is also same for BIO wine.

But the pricing of alcohol is a State subject. Maharashtra has exempted excise duty for wines produced in the state, but levies an exorbitant 150% special excise duty on domestic wine imported from neighbouring states like Karnataka.

What this means is that importers of wine based in Maharashtra can affix their own label on such bulk imports, and sell them at a much higher price-because their sale price will be much higher, but their cost price would remain the same.

"Wine producers are denying that they are importing wine, so that they get excise duty benefits," Subhash Arora, president of the Indian Wine Academy, told Moneylife.

Mr Arora states in his article that import of bulk wine is a good way of saving costs of winemaking and Australia offers a wide choice. China, as it has been doing in the recent past, is also flexing its financial muscle here and has been quick to tap the Australian market for its bulk wine imports.

On 17th January, Rajeev Samant (founder and CEO of Sula Vineyards, one of Maharashtra's and the country's leading wine producers), commented on the above article posted on the Indian Wine Academy website: "So where do you think that bulk is going, Subhash? Do share your unparalleled knowledge with us!"

When Moneylife pointed out that Mr Samant had commented on the Indian Wine Academy's website, Mr Arora was quick to point out that Sula was not part of this game.

But the question remains, who has been taking advantage of Maharashtra's liberal excise duty regime?