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Defunct IGPB to be Monumental Embarrassment to India

Posted: Tuesday, 11 August 2015 11:52

 

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Defunct IGPB to be Monumental Embarrassment to India

Aug 11: Death knells are ringing for the Indian Grape Processing Board and when the shutters are downed permanently, it will be a huge embarrassment for the Industry and the country and a back-handed slap for the Make-in-India concept in wine production, for which both the government and the industry have been equally short-sighted and responsible as time will tell, writes Subhash Arora who feels this is a regressive milestone for the Wines of India brand

Confirming this, the last Chairman on record Jagdish Holkar says the mandate for the IGPB expired on March 31 and nothing has been heard from the Board or the Ministry of Food Processing under whose Aegis it was formed. Although his Facebook Profile Status shows he is the Chairman of the Indian Grape Processing Board, he says he is not the Chairman anymore and the Board has been in limbo. Siraj Hussain, who was P.S. to the Minister of Food Processing Industry and overseeing the operations, has been transferred to the Ministry of Agriculture, he adds. There is also a change of guard at the level of the Joint Secretary who directly supervised the operations on behalf of the ministry.

A call to the MOFPI office ended in a terse reply saying the Board had been abolished. delWine has sought an appointment with the Hon’ble Minister Mrs. Harsimran Kaur Badal to ascertain the facts and discuss the possibility of reviving the Board.  ‘Abolition’ does not necessarily mean a permanent disbanding which would be like throwing out the baby with the bathwater. It will be a blunder underlying the myopic vision of the government and a monumental embarrassment to India which talks progressive but walks regressive.

Producers’ Contribution

Analysts will come out with various reasons for the debacle but one of the explicit reasons for the failure has been the lack of contribution by the industry -financially or otherwise. They have been constantly harping on subsidies and handouts. General belief is that the organisation was politicised and polarised from the very beginning with feeble chances of success. One hoped that beyond the bickering, the producers and the government would act jointly to promote the industry which is a boon for employment of farmers and has a huge potential for exports, and also reduce hard liquor consumption as the younger drinkers become more sophisticated in their life styles.

The mandate of the Board was to have joint industry participation with 50/50 contribution and government taking a back seat gradually. The mutual distrust was visible almost from the very beginning with the government not willing to let the control slide away and the producers shying away from any contribution which is otherwise a common international practice. According to Holkar, Sharad Pawar, the then Agriculture Minister had even agreed to 85/15 split (which would be more than fair, if true). The industry just did not come up with the financial support and the government might have finally cut the umbilical cord. Interestingly, the better established raisin producers had agreed to contribute a sum of Rs. 2.5 million a year for 3 years but the response from wine producers was practically nil, according to Holkar.

Maharashtra Wine Board in the making?

In the meanwhile, Holkar claims he and a group of producers of Nashik have started focusing on the Maharashtra government for the formation of a Wine Board on the lines of Karnataka Wine Board (KWB) which has been fairly successful in making Karnataka more pro-wine and in helping the local producers with more friendly production policies and to market their wines. Jagdish Holkar says that the KWB has been successful to help the domestic producers in the Indian market and there is no reason for a similar one in Maharashtra not to succeed.  ‘Each to his own’ seems to be the mantra where exports or brand Wines of India is concerned.

Membership of International Organisation of Vines and Wines (OIV)

One of the major casualties of the tragic death of IGPB will be our relationship with OIV. India became a member only a couple of years ago of this premier UN type-organisation that has 49 member states-growing eating or raisin grapes or producing wine from wine grapes. The membership is cumbersome and through a lengthy process wherein only governments may be members. India became a member state through the Ministry of Food Processing Industry with IGPB only facilitating it. The membership was after due process that took almost two years and was unanimous by the OIV member states where a majority of members have to accept the application. It was creditable that the application was accepted unanimously. The final approval was after the cabinet approval and  through the Presidential decree signed by the former President Pratibha Patil.

There is a nominal annual membership of €14,000 a year for India. Although some questions are being raised from the not-so-well-informed quarters about how and who will make the payment or whether it will continue its membership, it should be stressed that Government of India is the member and obviously the bureaucrats and politicians understand the importance of international commitments. Although India was conspicuous by its absence at the OIV General Assembly meeting last month, perhaps due to IGPB being in a limbo, hopefully this was a one-time faux pas. One does not need to know missile technology to comprehend that if funds were a problem any one producer could have been requested to represent India at their own expense by the Ministry of Food Processing Industry.

General global impression has been that OIV would have an Indian President (usually a wine producer) one day and it would be only prudent to keep the stakeholders actively involved in the working of OIV which provides unlimited structured knowledge of wines, laws, scientific data and networking possibilities.

IGPB and Wines of India

One of the main objectives of IGPB was to promote Brand India overseas. They have been successful to some extent through participation in various international shows and tastings at various embassies and other forums.  However, there is a lot that still needs to be done. Big players would  be able to promote their wines on their own as they have marketing budgets. It’s the smaller producers who make good quality and endeavour to improve further but are not in a position to spend money on promotion and need hand-holding for the next decade or two.

The process initiated by IGPB would come to naught without their functioning. Earlier APEDA had not made any discernible progress in the area as mandated by the government. Incidentally, every producer nation has some form of agency promoting wines from the country. Wines of Chile, ICEX (Spain), California Wine Institute, Austrian Wine Marketing Board (AWMB), Wines of South Africa (WOSA) are just a few such examples of government-industry-run organisations where the industry is required to contribute, sometimes by law and based on the production volumes. AWMB runs very smoothly as an efficient professional organisation with a national staff of under 20 and has changed the image of Austrian wines since the Board was formed around 25 years ago and has helped significantly in the increase of export and price realisation per liter due to efficient and professional approach.

There are also many problems faced by domestic producers, one of them being the need to change the government’s perception of equating wine with liquor. It is relevant to recall that despite its  efforts and desire to name the Board as the Indian Wine Board, it failed to do so because of the backlash feared from the anti-alcohol lobbies and even though Karnataka Wine Board was successfully formed before and has been running without any political problems, the rather trite name -IGPB- was finally decided upon.

There are anomalies in law at the State level, many of which may not be easy to change, wine and alcohol being a State subject but an organisation of the stature of IGPB could take up the cases for the industry as a whole. As an example, Delhi Excise Department has been unusually harsh this fiscal year and has doubled the label registration fee from Rs. 100,000 to Rs. 200,000 a year (although capped at Rs. 10,00,000/ Rs. 1 million, same as last year) making it practically impossible for the smaller producers to enter the Delhi market, leaving only the big players to operate. This reeks of an anti-competition measure contrary to the government policy on fair competition. 

There is another anomaly of allowing sales to the restaurants strictly on a case (12 bottles) basis and not by bottle whereas imported wines are allowed by the bottle. This is a legacy going on without any pertinent reason in today’s scenario where Indian wines can be more expensive than many imported wines. If one has to conduct a tasting of all the Sauvignon Blancs in India in a restaurant, one has to order a case and not the bottle whereas a single bottle of imported wine may be ordered.

This is grossly unfair with no logic and a body like IGPB ought to have been involved deeply in this.

FSSAI- standards, OIV and IGPB

It is not a matter of pride that since the FSSAI became active in 2008 and the IGPB which was formed in 2009, nothing substantive has been done to formulate the standards for wine in 5-6 years with both the agencies trying to flex their muscles. IGPB has conceded on more than one occasion that the real authority is with the FSSAI but IGPB was expected to give its recommendation. The bare fact is that there are no standards. This despite the fact that OIV has a list of specifications which could be adopted with modifications even if as guidelines to start with. As of now, the draft regulations are reportedly being formulated by FSSAI which supposedly is following the Codex international specifications which are in congruence with OIV rules. It may be mentioned here that OIV is not a regulatory body but only a recommending body and can give information or have the member states connect with each other. Their role is equally important for the export of eating grapes.

Status

Meanwhile, according to Holkar, the industry is in a happy situation in the short term with demand for grapes and bulk wine at an all time high, making it a win-win situation for everyone.

No Politics Please

In the absence of any clear-cut directions or policies, many rumours have started doing the rounds- starting from the central government being anti-alcohol and wine and thus creating hurdles for growth. People in the know claim that the government will is lacking. There is also a murmur that the Ministry of Food Processing is being run by Union Minister Harsimrat Kaur Badal who is not from the BJP but a coalition partner Shiromani Akali Dal and perhaps does not get as much co-operation from the Cabinet. In several meetings with the IGPB and producers she has been known to be sympathetic to the wine industry and has been reported to be very positive but has not been able to cut the ice with the Union Cabinet in decisions that are needed for the growth of the domestic industry. It would be most unfortunate if the Board remains in limbo or goes down the drain due to political contingencies.

One hopes that a big black mark in the history of wines in India with a great potential to be an important player in the global market and providing wages to thousands of farmers will be avoided and the current status is temporary and a pit stop and not a fatal crash.

Subhash Arora

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Tags: Indian Grape Processing Board, Make-in-India, Wines of India, Jagdish Holkar, IGPB, Ministry of Food Processing, Siraj Hussain, MOFPI, Harsimran Kaur Badal, Nashik, Maharashtra, Karnataka Wine Board (KWB), OIV, Ministry of Food Processing Industry, Brand India, APEDA, Wines of Chile, ICEX (Spain), California Wine Institute, Austrian Wine Marketing Board (AWMB), Wines of South Africa (WOSA), AWMB, FSSAI

Comments:

 
 

Subhash Arora Says:

Dear Shankar, I agree with you that the wineries should take over. Initially, that was the plan envisaged by the government. It would fund the Board and gradually withdraw from it as more and more funds came from the industry. But the industry refused to co-operate and contribute. The government kept a tight bureaucratic control. I have little doubt that it would not succeed if it is done entirely as you suggest. The only way is through legislation. In many countries like Austria, South Africa and Italy where I have discussed with the producers and such organisations, the money comes from the funds created through a levy based on the sale or export per bottle (like in South Africa). Usually, there is a President from industry, who may be for a fixed 2-3 year term and appointed through elections (in Italy). In Germany there is no term restriction. The Director is a professional whose job it is to promote sales/exports. I marvel at the efficiency of the Austrian Wine Marketing Board-the best such model in the world. It has been very professional and result-oriented. Incidentally, they have only an MD with a team of around 20 working towards export promotion and have done an enviable job. Similarly WOSA has a staff of only 20 and they just organised the triennial Cape Wine 2015 with grand success!. Subhash Arora

Posted @ September 25, 2015 10:39

 

B.Shankaranarayan Says:

All Indian wineries should get together and set up a separate company to promote Wines of India within the country and abroad. Wineries should be the shareholders but directors must be independent professionals. Only such an institution can deliver results. It can lobby with state govts. and put in real effort to take the Indian wine industry forward. And Dhananjay Datar is the right man for this job

Posted @ September 24, 2015 11:32

 

Anupama Kotur Kaddi Says:

Shame that IGPB has become defunct when it was needed the most. While it is an excellent idea to establish a wine board for Maharashtra on the lines of Karnataka Wine Board, a greater role on the part of the central agencies cannot be overruled. Agreed that the wine industry is, for now, in a 'happy situation' but far sight and vision on the part of both wine producers and Government can go a long way.

Posted @ August 17, 2015 12:48

 

Alok Mathur Says:

Well written, Subhash, and with a heavy dose of bitter truth, I must add. The task is complex and difficult, and the agendas are apparently many. It is time that people got out of bed and smelled the roses. The need of the hour is for everyone concerned to realise that whatever the individual interests and agendas might be, success will be elusive until we look forward and outward and notice that with all the knots that we perennially seem to tie ourselves up in, the world is passing us by. Surely there is enough entrepreneurial skill and there are enough forward looking people in the industry and government who recognise the absolute and raw necessity of collective, industry-wide advancement and who have the conviction to put long term success ahead of personal agendas and hollow short term wins? Dhananjay, the wasted money is probably dwarfed by the massive opportunity cost of this failure!

Posted @ August 17, 2015 18:04

 

Subhash Arora Says:

I never for a moment blame the government alone, Dhananjay. Industry is to be blamed equally, if not more. The problem has been too many policitians entering wine business, myopic vision and of course, totally misjudging the market and marketing required. But try telling to the foreign producers. They snigger at the way things are handled at times in India. I am still hopefull, the ministry will make efforts to revive the concept. We will otherwise lose 10 years or more in terms of Brand India promotion. We need to look at the future of the country and not only the present and looking only at self interest. Thanks for the compliment about th article. Subhash Arora

Posted @ August 13, 2015 12:00

 

Dhananjay Says:

Aptly said... It's not the govt alone. But wine producers negative approach ...and only agenda that govt should fund.. I was one of the main person in writing the IG PB concept...which was put to drain on day one as it was established like co operative society...i feel sorry and ashamed as money was wasted...i was driving standards but who is keen? They don't want quality.. Mr arora. Appreciate your article...will be happy to do anything for wine industry

Posted @ August 13, 2015 11:20

 
       

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