New Zealand wine producers will gain cheaper access to India’s consumers under a newly ratified trade agreement, but the biggest tariff cuts will favor higher-priced bottles and take a decade to arrive.
The New Zealand–India Free Trade Agreement takes effect on October 20, 2026. It will gradually reduce India’s 150% wine import tariff to 25% or 50%, depending on a wine’s import value. Wines valued below US$5 per 750 milliliters will remain subject to the full 150% duty.
New Zealand Trade and Investment Minister Todd McClay exchanged formal documents with India’s high commissioner to New Zealand, Muanpuii Saiawi, at Parliament. New Zealand’s Ministry of Foreign Affairs and Trade confirmed that both countries had completed ratification.
McClay said the agreement would open market opportunities and provide greater certainty for New Zealand exporters, investors and businesses seeking to expand in India.
For wine producers, the immediate benefit will be a substantial tariff reduction on eligible bottles, followed by smaller annual cuts. The reductions depend on each wine’s cost, insurance and freight (CIF) value, which includes shipping and insurance rather than its retail price.
The thresholds are set in U.S. dollars, not New Zealand dollars.
A separate side letter also provides protection against certain future tariff disadvantages, as we have reported. According to the New Zealand government’s National Interest Analysis, India has pledged to extend equivalent benefits automatically to New Zealand wine if it grants more favorable wine import treatment to a country with which it does not have a free trade agreement.
Lower Tariffs, Persistent Barriers
India’s large population and expanding economy have made it an attractive prospect for wine exporters seeking new sources of growth. Its 150% import tariff and complicated regulatory system, however, has long made imported bottles expensive to bring to market.
Alcohol taxes and regulations vary widely by state, with separate requirements for licensing, distribution and retail sales. Exporters benefiting from lower import tariffs will still need to navigate those rules to reach consumers.
Maharashtra, home to Mumbai, for example, imposes a 40% value-added tax (VAT) on wine, according to the state government’s published rates, while other foreign spirits attract a 65% rate. Alcohol is also subject to state excise duties and local fees for requirements such as label registration and licensing.
In the country’s capital New Delhi, excise duty on imported wine is calculated using the wholesale price. For a 750-milliliter bottle with a wholesale price of up to 1,000 rupees (US$10.4), the rate is 65%. For bottles above that threshold, the first 1,000 rupees is taxed at 65% and the remainder at 50%.
Karnataka, home to Bengaluru, has a different system. The state previously divided alcoholic beverages into 16 price bands based on their declared prices and levied additional excise duty accordingly. In April 2026, it began moving toward an Alcohol-in-Beverage (AIB) excise system based on alcohol content, while progressively reducing the number of tax bands to eight.
Some states altogether prohibit or heavily restrict alcohol sales. Bihar, Gujarat, Mizoram, Nagaland and parts of Manipur enforce outright bans or stringent prohibition policies.
These differences mean India cannot be treated as a single, uniform wine market. Wine consumption, however, remains concentrated in major cities such as Mumbai, Delhi and Bengaluru.
For New Zealand wineries, the deal offers a clearer route into a potentially significant market. Whether that access translates into sales will also depend on pricing, distribution and the demands of doing business across India’s individual states.
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