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Wine Kept Out Of India-Chile PTA

But Indian wine companies can examine the possibility of taking advantage of Chile's liberal land ownership rules and acquire vineyards in that country ,

By Sourish Bhattacharyya

Wine, a product which Chile takes pride in exporting, does not figure in the list of items allowed by India for imports from the South American country under the Preferential Trade Agreement (PTA) signed by the two last week, reports quoting The Hindu Businessline.

Despite high duties, wine imports from Chile have gone up from 930 9-litre cases in 2000 to 10,500 last year. "I would have very much liked to have wine included, but this is only the first step," said Chile's Ambassador in India, Jorge Heine, who signed the agreement on behalf of his country. Heine has been a big supporter of wine promotions in New Delhi, his memorable quote being: "If I talk about copper ore, people won't be interested in what I'm saying. But wine gets people interested in Chile.

The Ambassador's last major wine promotion activity was Top Chile, where an independent committee of industry experts joined the Embassy of Chile and the Indian Wine Academy to rate seven most expensive Chilean wines selling in India. But obviously, the Ambassador's advocacy of the cause of his country's wine industry didn't cut much ice either with his government or the Government of India.

In an interview with Subhash Arora, President, Indian Wine Academy, Heine had said on : "Chile has one of the highest growth rates among wine exporters, comparable only to Australia's. Our exports have had an average annual growth of 22%, starting from US$51 million in 1990 to US$835 million in 2004. The industry had initially aimed at reaching US$1 billion in exports in 2010. It looks like we will reach the target much earlier and we are revising our projections upwards. Our aim is to hit US$1.5 billion by then. We also export 75% of the wine we produce, the largest such share in the world."

Maybe there were bigger fish to fry, but it's difficult to swallow that Chilean wine wasn't considered big enough to be included in a vast laundry list of 600 items covered by the PTA, which is a milestone in the developing economic relationship and strengthening defence ties between the two countries.

The significance of the PTA lies not in the duty cuts, but what it is expected to lead to. Chile has a very low peak customs rate - 6 per cent (unlike our whopping duty burden on wine) - and duty cuts from this level are purely cosmetic.

But the agreement is expected to mature into a fuller Free Trade Agreement and, to quote The Hindu Businessline , "become a signpost for other Latin American countries," which have been the object of intense economic diplomacy on the part of India since the time of the BJP-led National Democratic Alliance government.

The government may have changed in New Delhi, but the tenor of India's emerging relationship with Latin America remains unchanged. Chile is the first country in Latin America that India has signed a PTA with. Last year, India signed a PTA with Mercusor - an economic block comprising Brazil, Argentina,Paraguay and Uruguay - but the constituent countries have yet to ratify it.

Wine may be out of the PTA's purview, but agriculture is fast emerging as an important source of cooperation between the two countries. The Indian Agriculture Minister, Sharad Pawar, will visit Chile later this year. It will be interesting to see if Indian companies follow the Chinese example and take advantage of Chile's liberal land ownership rules, buying tracts of forest land and bringing back the produce.

Indian wine producers, who've been importing bulk wine from Chile, could also examine the possibility of buying vineyards in Chile. They should take the cue from what Heine had to say in his interview with Subhash Arora: "We still have several hundreds of thousands of hectares that could be converted into vineyards." We had earlier reported that Brindco, India's leading importer of wine based out of New Delhi, is in final stages of discussions with a Chilean company to buy a winery in that country.

Chile is the country with the highest number of free trade agreements - it has signed pacts with over 40 other nations. Last year, this c ountry of 15 million people exported $40 billion worth of goods, which is more than half of India's exports. The composition of Chile's exports has also changed. Once upon a time, 85 per cent of its exports used to be of copper; now the metal accounts for only 35 per cent.

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