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India's Domestic Wine Industry Booms 

A decade-old domestic wine industry in India is expanding rapidly as Indians acquire a taste for wine. But as Anjana Pasricha reports from New Delhi, high import duties continue to remain a barrier for foreign wine producers in the Indian market.

When corporate executives threw parties ten years ago, they only stocked whiskey, vodka and beer. But as a growing economy and increasing affluence changes tastes, middle and upper class Indians make sure they have wine to offer when friends come over.

And those who do not know enough about wine are thronging to wine appreciation seminars and events to master the intricacies of which wines to serve with what.

Many of these events are organized by the Indian Wine Academy. Its head, Subhash Arora says:

"The growth has been slightly faster in the last three, four, five years, because there has been a lot of wine promotion, and people have been trying to create awareness, wine education and things like that, and so the culture is expanding and its increasing regularly," he said.

The boom in wine drinking has helped the Indian wine industry become one of the fastest growing in the world. The industry took root barely a decade ago, but it now accounts for nearly three quarters of the wine sold in the country.

Rajeev Samant, who began Sula Vineyards in the Western Maharashtra state, says the quality of domestic wine is improving in his words "slowly and steadily" as knowledge of winemaking increases.

"When we started no one had ever planted wine grapes in our area, no one had ever made wine, none one had ever tasted wine, so of course these are pretty big barriers to overcome, but what we have found is that the climate in Maharashtra is fantastic for wine growing," said Samant. "The knowledge is increasing day by day, and today we make a pretty decent bottle of wine. I would say that probably the best bottle of wine that is made in India today would compare easily with a $30 bottle of wine that is produced abroad whereas five years ago it might have been just a $12 bottle."

But not everyone is happy. High import duties make foreign wines very expensive, keeping them out of reach of all except the most affluent. Taxes were lowered last year after complaints from the European Union to the World Trade Organization, but they continue to be prohibitive at about 150 percent.

However, the government is under pressure to further slash duties on imported wines, and foreign wine producers are hoping to benefit from the boom in the Indian wine market if that happens.

Indeed, there is still huge potential for growth, because India's wine consumption, although increasing, is still tiny compared to Western countries. India sells about one million cases of wine a year - that is expected to double by 2011.