Indian tariffs cause major barrier to entry for Australian wine producers
Indian and Australian officials are battling it out over tariffs on wine and dairy products as they move towards a long-term trade deal. Despite the challenges posed by high levies, is India still a market worth betting on for producers Down Under?
Wine has become a key sticking point in ongoing trade negotiations between Australia and India. The two nations signed an interim trade pact in 2022, but India has now rejected Australia’s push for deeper tariff cuts on dairy and alcohol as they work towards agreeing a Comprehensive Economic Cooperation Agreement.
Debate over the two industries risks hampering efforts to conclude the second phase of the trade pact by the end of 2025.
Under the interim pact, tariffs on Australian wine priced above AU$5 (HK$25.21) per 750ml bottle were cut to 100% from 150%, with a provision of a reduction to 50% over 10 years. For bottles above AU$15, tariffs dropped to 75%, with a target of 25% in a decade.
Australian officials would like to see deeper and faster tariff reductions, as well as a reduction in the minimum price at which those tariff cuts can apply.
Further reductions would give a greater number of Australian wine producers better access to the market.
Pushback comes from Indian officials, who fear that an influx of Australian wine would damage the country’s nascent domestic industry. Indian government sources told Reuters in July that farmer groups and politicians from Gujarat and grape-growing Maharashtra, along with the US$35 billion (HK$272bn) alcoholic beverages industry, are strongly opposing any concessions.
Lee McLean, CEO of trade body Australian Grape & Wine, argued that tariffs make India a less attractive market for producers and put off Indian consumers. He said relatively affordable wines, costing just AU$10-AU$15 at home, can retail for AU$100 in India due to taxes and levies.
“We’re a free trading nation, so, fundamentally, our view is that tariffs aren’t a good thing for consumers, and they’re not a good thing for international trade,” he said.
McLean described India as traditionally a “protectionist market”.
However, he also claimed a deal could be struck that gives Australian wine producers greater access “in a way that isn’t cannibalising the Indian wine producers’ market”.
Wine constitutes less than 2% of all alcohol consumed in India. McLean argued that Indian and Australian producers should be working together to “build the category overall in India, to grow the pie for both Indian producers and Australian producers. If we look at it as a holistic relationship, there is a real opportunity to do something that benefits both parties.”
If better market access and regulatory improvements are denied, McLean believes it will be difficult to “get that critical mass of producers in the market”.
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Australia exports around AU$9.5m worth of wine to India each year. By contrast, in the 12 months to March 2025, Australian wine exports to Mainland China, its biggest market by volume, reached AU$1.03 billion.
But McLean sees India’s potential as an export destination. “The sheer size of this population is extraordinary. Around an additional 19m people reach legal drinking age per year in India. This is an opportunity, long term as it may be, that is unparalleled, in my view,” he said.
The Australian Grape & Wine CEO is not alone. While exports to India are small, some Australian players are already tapping into its potential. Sally Burton, senior vice-president of international marketing at Jackson Family Wines, said that while India has traditionally been a beer and spirits market, it is “seeing a shift toward wine, particularly among urban, younger consumers and women”.
She said: “India’s growing middle class with higher disposable income is driving interest in aspirational products like wine.”
While Burton sees a “growing appetite for imported wines as Indian consumers become more exposed to global trends”, the regulatory barriers skew consumer preferences towards lower-priced wines, “with most importers favouring wines under AU$10 per bottle ex-winery”.
Michelle Geber, managing director at Château Tanunda, shared a tentatively hopeful view of the market. “We are in conversations with the Indian market, though the current tariffs are a real barrier to entry as the final prices for our Australian wines are high for consumers,” she admitted. “However, we are seeing that wine is growing in popularity.”
Both producers are betting on India as a growth market, and are hopeful that efforts to further reduce tariffs on Australian wine will bear fruit.
“For us, it’s about starting avenues of conversations now and ensuring we are already working to have an understanding of the market in anticipation for those future movements,” Geber said.
Burton agreed that while India remains “underdeveloped” in comparison with China and other Asian countries, it offers “significant growth potential”.
Jackson Family Wines exports some of its Californian wines into the India market and is pursuing distribution for some of its Australian wines.
Australian Grape & Wine’s McLean warned producers that “this is not going to be an overnight success story”.
However, missing out on the burgeoning wine market in India could come back to bite producers in the future. He said: “I don’t want people in our industry to look back in 20 years time and say ‘Gee, we should have done more in 2025’. We have to be investing now and looking for that long- term opportunity.”
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