India being protectionist, says US wine industry

Despite its commitment before the World Trade Organisation (WTO), India has "enacted highly protectionist trade policies" that negate concessions to the multi-lateral trade body, said James Gore of the JBClawson International before the US International Trade Commission's hearing on 'India: Effects of Tariffs and Non-Tariff Measures on US Agricultural Experts'.

The special hearing on India in this regard was convened by the US International Trade Commission at the direction of the US Senate Committee on Finance. JBClawson International represents the US wine industry on international affairs, trade policy and emerging market development.

Gore said that because of the high tariffs imposed by both the federal and the state governments, the US wine in India is quite unaffordable. "I found myself quite often looking at a $10 bottle of California Zinfandle in a scolding hot store covered in dust retailing for $80."

"If considered the cumulative effect of various tariffs, taxes and special fees, the effect can reach a 400 per cent fee increase. If we include Indian mark-ups at the importer, distributor, wholesaler and retailer levels that amount can double," he said.

The Indian wine market is currently valued at $60 million, but with the growth and activity, it offers a unique opportunity for US wine exporters to expand the reach and profitability of the American wine industry, Gore said.

"However, the cumulative effects of duties, taxes, special fees and the regulations and restrictions on distribution, marketing, consumption and retail sale makes the prospect of selling wine sale in India a complex, costly and often frustrating endeavour," Gore observed.

As the Indian economy continues to grow at an astounding rate, he said, the Indian government has taken steps to protect its industry.

"This national demand for products such as wine has encouraged the development of a domestic wine industry and the Indian government has taken significant strides in developing its trade policies to protect its nascent industry," he said.

In his presentation, Gore said India risks multiple WTO disputes due to serious concerns raised by the US, the EU and other wine-producing nations who accuse Indian states of violating international provisions of National Treatment, whereby individuals and firms of foreign countries are afforded the same competitive opportunities as are available domestically.