EU-India Trade Deal Slashes Wine Tariffs After Two Decades of Negotiations

The recent signing of the EU-India free trade agreement marks a significant change for the wine industry. After nearly 20 years of negotiations, the deal reduces tariffs on European wines entering India from 150% to 20% for premium bottles and 30% for mid-range wines. This move is expected to reshape access to fine wine in one of the world’s most protected alcohol markets.

India’s high federal import tariff has long been cited as the main barrier for European wine producers. According to WineCap, a fine wine investment platform, this reduction is the first real step toward making European wines more affordable and accessible in India. Alexander Westgarth, CEO of WineCap, said that while the change will not transform the market overnight, it could shift demand and improve long-term access for European producers. He noted that it may take five to ten years before the effects are fully seen.

Unlike China and Hong Kong, where fine wine consumption grew rapidly after similar trade changes, India faces additional challenges. These include complex state-level taxes and regulations, with some states remaining dry. However, major cities like Mumbai, Delhi, and Bengaluru show strong potential due to their growing populations and increasing wealth.

Wine consumption in India remains low compared to other countries. In high-income economies, wine accounts for about 27% of alcohol consumption; in Europe, it is closer to 31%. In India, average wine consumption is just 0.02 liters per adult per year. By comparison, Portugal’s rate is 60 liters per capita, while France and Italy each exceed 40 liters. Spirits dominate India’s alcohol market at 53%, followed by beer at 46%. Wine makes up less than 1%.

Despite these figures, there are signs of change. India’s middle class is expected to nearly double over the next two decades, rising from about 31% of the population in 2023 to 60% by 2047. This demographic shift could be key for wine producers. WineCap argues that wine is increasingly seen as a lifestyle product rather than a mass-market beverage in India. The country’s wine market was valued at under $200 million in 2022 but is projected to surpass $700 million by 2030.

Education is another factor driving growth. Sonal Holland became India’s first Master of Wine and has built a large following on social media, helping raise awareness about wine culture. The Wine & Spirit Education Trust (WSET) reports a 30% increase in course providers in India over recent years, now totaling ten. Demand for WSET qualifications is growing in major cities and expanding into new regions thanks to online learning options.

Carolyn d’Aguilar, WSET’s marketing director, said Indian consumers are seeking more information about their drink choices and view wine as aspirational. Last year about 1,000 students took WSET courses in India; this number is expected to rise as more people enter hospitality or seek personal knowledge.

However, challenges remain beyond tariffs and education. The exchange rate makes international courses expensive for many Indians. Accessing imported wines can also be difficult due to limited selection, high prices, and concerns about storage conditions during transport and sale.

Logistics will play a crucial role as demand grows. Westgarth emphasized the need for reliable import partnerships that can ensure safe and temperature-controlled delivery of wines across India’s vast geography. Without improvements in infrastructure and distribution networks, even lower tariffs may not be enough for European producers or Indian consumers to fully benefit from the new trade agreement.

The EU-India free trade deal represents a major opportunity for both sides but will require time and investment before its full impact on India’s fine wine market becomes clear.