ECTA is a starting point for this emerging long-term export market prospect. One of the largest market access hurdles for imported wine to India is the 150% import tariff applied to all imported wine. ECTA provides some gains for high-value producers of Australian wine.
Under ECTA Tariffs on Australian wine with a cost, insurance and freight (CIF) value of over US$5 per 750ml bottle will decrease from 150 per cent to 100 per cent upon entry into force, with a further phased reduction of 5 per cent per year for 10 years down to 50 per cent. Tariffs on Australian wine with a CIF value of over US$15 per 750ml bottle will decrease to 75 per cent upon entry into force, with a further phased reduction of 5 per cent per year for 10 years down to 25 per cent.
ECTA does provide a starting point to building this market however there is broad acknowledgement that more work needs to be done over the coming months and years if we are to realise its potential. Refer to full tariff reduction schedule table below:
|CIF* Value of Wine for a 750 ml bottle||Existing Customs Duty||EIF (29 Dec 2022)||Year 1 (1 Jan 2023)||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7||Year 8||Year 9||Year 10|
Following the successful passing of ECTA through the Australian parliament during the week of 21 November 2022, India was able to complete their processes, rapidly allowing for the agreement to enter into force this year on 29 December 2022. This was an important step as it will allow for two tariff cuts in quick succession; the first on entry into force (29 December 2022) and the second at Year 1 on 1 January 2023.
Further reduction in import tariffs during phase two of the negotiations on the full FTA will be vital to spur investment in the Indian wine markets, helping to grow the category for Indian and Australian wine producers alike.
ECTA also contains an important side letter containing provisions for “most favoured nation” (MFN) treatment for Australian wine. This MFN treatment, specifically provided for Australian wine in the agreement, means that any preferential tariff treatment afforded to other countries via future trade agreements with India will also be applied to Australian wine.
Furthermore, the agreement includes another wine specific side letter on “Trade and the Production of Wine” which is another major step that will create opportunity to remove some of the non-tariff barriers for Australian wine, and make it more cost effective and timely to export Australian wine to India.
India remains a small emerging market, but the initial growth is already becoming apparent with the market growing from just AU$5 million in 2020 to over around AU$16.2 million to September 2022. Work to continue to build on ECTA in ongoing full trade agreement negotiations commencing in 2023, will continue to be a key priority for Australian Grape & Wine
For more information about ECTA Australian Grape & Wine’s summary of the outcomes of ECTA are available at our website here.