Domestic wine makers are facing a serious threat from the grey market, which is thriving on 'leakages' from foreign embassies in the national capital.
The ministry of external affairs permits import of a certain number of bottles per month to each embassy for their internal consumption.
Sources in the industry peg these figures at 300 bottles of wine a month. This allowance coupled with the sheer number of embassies have spawned a mini industry in Delhi.
These duty-free foreign labels find their way to neighborhood bootleggers who sell them for anything between Rs 200 and Rs 400.
Rajeev Samant, managing director, Sula Wines said: "It is difficult for us to convince people to buy an Indian wine for Rs 400-1,000 when you can get a premium foreign brand for Rs 200-400. The only thing we can do is to alert the authorities about the state of affairs and see what they do about it."
Wine manufacturers are not to pleased about the dogmatic role played by the government in Delhi, where all liquor stores are state-owned.
"Delhi is a very important market for us actually it is second only to Maharashtra, but the state government wields the stick here. If given a free hand, this market will overtake Maharashtra in two years but government regulations and a thriving grey market makes it a wine manufacturer's nightmare," Ranjit Chougule, COO, Chateau Indage, said.
Though the menace has been plaguing the industry for sometime now, it has become acute this year.
The grey market now accounts for 400,000-500,000 bottles of the 45-lakh (4.5 million) bottle domestic wine consumption.
Industry sources say the problem can be traced to embassies of some developing nations especially those of non-liquor consuming countries.
The recent reported raid on a foreign embassy where a stash of 10,000 liquor bottles were found is an example of how diplomats and their offices work their way around the restrictions and make a killing in the grey market.