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5% VAT on wine affects M'rashtra wineries
Tuesday, 21 July, 2009, 08 : 00 AM [IST]
Our Bureau, Mumbai
The additional 5% VAT on wines imposed by the Maharashtra Government has affected the sale of wines in the state. This has brought the total VAT on wine sales in the state to 25%. S G Chougule, chairman of the newly constituted Indian Grape Processing Board and chairman of the country's oldest winery, Chateau Indage, has admitted that sales volumes have fallen 60% since September last year.

Addressing the 15-member Board, he said, "Small wineries are in a particularly bad shape and they will not be able to crush any grapes in the 2009-10 season or they could crush but would not be able to pay contracted rates." Most of the wineries in Nashik have threatened to stop buying grapes from farmers during the next grape season as they have accumulated stock of unsold wines due to the hike in VAT.

With the state cabinet holding its meeting in Nashik, the country's wine district, on July 22, growers and wine makers from the region were confident about the roll-back of the 5% VAT the state has imposed on wine. Since 60 of the country's 66 wineries are located in Maharashtra, what happens in the state becomes an industry issue, said Ashok Sinha, secretary, ministry of food processing industries.

However, seeking to give the industry a pan-India presence, he said the industry had not taken the full benefit of all government assistance. "The wine industry has not taken its due share of funds allocated by various ministries. These can flow into this sector through the Indian Grape Processing Board. There are funds available under the department of science & technology, the department of biotechnology, the agriculture ministry and some research institutes," Sinha said.

The board would undertake a sector study to address the issues facing the grape growers in the state. The study was expected to be ready in three to four months, board vice-chairman K Rajeswara Rao said. Over the past five years, the country's wine market grew at 25-30% annually, this sudden and steep growth was creating problems now as it is facing slowdown, Vinod Kotwal, CEO of the regulatory board said.
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