Indian Wine Duties Revisited

Wine Taxes IndiaSo the last time I broached this subject was a good few years ago. The comments poured in heavy requesting for the promised sheet with the duty calculation formula. I diligently sent it around but a few months down it was outdated. I promised a new one shortly but then fell off the map. I resurfaced only to find that people were still requesting an updated duty calculation sheet. Clearly India, or rather, the potential of a virgin Indian wine market has a certain continuing charm. Well, I can tell you one thing, like many a skyline, it looks better from a distance. 

The new sheet is ready and should you a wish a copy please leave me a comment and I shall mail it over. This time I have expanded the chart to include the state of Karnataka (capital, Bangalore) along with Maharashtra (capital, Mumbai) and Delhi.

All you need to do is change the currency in the topmost left cell (INR71 is the current conversion rate for 1 Euro). You can change it to Dollars (1USD=INR67), Sterling Pound (1GBP=INR100), Australian Dollar…you get the idea…

One more (and very important) thing about the sheet. You will notice that as we progress through the sheet and each new levy is added, the formula in the cell below reflects not just the amount being added but the final cumulative total till that point. In simpler English, instead of merely telling you how much the customs amount will be, the sheet will show you the price of the wine upto that point including the customs portion. And so on, as each new component is introduced, the number below in the cell will show the total till that point. If that’s not clear, just double click the cell and see the formula for yourself.

And if it still doesn’t make sense, then just put in the FOB price in the first box and the sheet will do the rest.

Some assumptions have been made for the sake of simplicity i.e. the margins that the importer will charge have been pegged at 20%. Similarly we have assumed a 15% for the distributor. Not saying this will happen; it could be higher. It could perhaps be much lower. It will all boil down to your negotiation skills. And then the retail margin is fixed as per government rules but here again, retailers, being the greedy lot that they are, will ask for much, a lot more. So the importer may have to increase his margin to account for all such “extra payouts” thereby increasing the amount before local state levies. Then there might be other costs like storage and transport which may need to be accounted for.

And in all this, I still haven’t added the state-centric registration cost which is applicable per label per brand. I have also not included in this calculation the fee for FSSAI (Food Safety Standards Authority of India) assessment, which will require not just a payment but also 2 sample bottles per label to be submitted for analysis each time a shipment hits India shores. Yep, each and every time! It’s not an annual thing. Hence depending on how much wine one ships at a time the cost as a percentage component will vary.

So much for fairy tale endings. But hopefully at least now you will be better equipped to handle things when you make a plan to enter this market. In the meantime, please leave me a comment asking for the sheet (politely, of course) and I’ll email it over. (Yeah, I still haven’t figured how to upload a link to it and make it available for direct download.)

June 6th, 2016 by