Australian Wine Producers Set to Tap into India’s $24 Billion Market

A man handles wine stock in the processing building at Obsession Wines on Nov. 24, 2020, in Tumbarumba, Australia. Lisa Maree Williams/Getty Images

Australia’s wine producers are being prepped by the sector into exporting wine to India—a market worth $24 billion.

This follows successful talks that were held at the Australia-India Joint Dialogue in New Delhi between Australian and Indian wine sector representatives.

The news also comes as Australian wine won the “the best in the world” at this year’s Decanter World Wine Awards.

Federal Trade Minister Don Farrell said Australia now has greater access to a market of 1.4 billion people under a trade agreement between the two countries.

“A serious window of opportunity has opened for our producers to move into an export market valued at over $24 billion in 2021, ahead of many of our key competitors,” Farrell said in a statement.

“It’s great that the Australian wine industry is taking the initiative to diversify, and get into this market early.”

Murray Watt, minister for Agriculture, Fisheries and Forestry said improving access to India’s growing wine market is an exciting opportunity for Australia’s winemakers.

“Already in the 5 years to 2021-22, Australia exported an average value of around $10 million and a volume around 2.3 million litres—and we want to see this increase over the next 5 years,” Watt said.

“India’s wine industry has been steadily growing over the past few decades and there is a lot we can learn from each other,” Watt said.

Watt added that “recent disruptions” to Australia’s wine exports have demonstrated the importance of trade diversification and that India has “enormous potential as a future market for our world-renowned wines.”

Australian Grape and Wine chief executive Lee McLean said the meeting was a “terrific step” towards collaboration and growth, and that it will “lay the groundwork for two-way trade and investment over the years ahead.”

This comes as Australia sought other export markets following the collapse of the Chinese market due to trade disputes and soaring tariffs.

Trade Agreement Gives Australia ‘Preferential Treatment’

In 2022, Australia and India signed a Free Trade Agreement known as the Australia-India Economic Cooperation Trade Agreement (AI-ECTA), under which tariffs were removed from more than 85 percent of Australian exports and from 96 percent of Indian imports.

Moreover, under the agreement, Australia will become the first major wine exporter to gain preferential access to India’s wine market.

For example, under the “most favoured nation” clause, Australia will be able to benefit if another country negotiates a better tariff reduction with India for wine.

The 150 percent tariff that was applied to bottles arriving in the Indian market at US$15 per bottle has already fallen to 70 percent. Then, on Jan. 1, 2032, further phased annual reductions will result in a 25 percent tariff.

Tariffs on wine priced between US$5 and US$15 have been reduced to 95 percent, with a phased annual reduction resulting in a tariff of 50 percent by Jan. 1, 2032.

“The AI-ECTA will change current market dominance,” said Austrade’s Business Development Manager in Delhi.

“By reducing tariffs on quality wines, the trade deal will help smaller companies into the market so they can compete with the majors.”

Prior to ECTA, bilateral trade accounted for $US27.5 billion in 2021. Under ECTA, there is potential for bilateral trade to reach $US50 billion in five years.