Sunday, March 3, 2024

Establish a Wine & Mead SEZ in Meghalaya

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By KN Kumar

SEZs (Special Economic Zones) are enclaves within a state that are governed by a set of liberal laws, to encourage private investment and generate employment. They are almost always export-orientated and less-taxed entities and are better administered because the administrative machinery is sensitized toward promoting businesses. Through this article, I propose that a Special Economic Zone (SEZ) be established in Meghalaya exclusively for the Wine and Mead Industry. I believe that such a step when taken will quickly bring in wealth because the SEZs provide minimal operational barriers, common facilities, tax exemptions, and create a favourable private investment climate in the state.
A bit of background is necessary here. The Government of India started promoting the SEZs in 2000 with the intent to promote exports. So far, 425 SEZs have been formally approved and 272 have become operational. 5,620 units have come up in the SEZs to date and total exports from SEZs stood at Rs.12.9 lakh crores in 2023. Most SEZs are located close to international airports and sea ports for obvious logistical advantages as well as the easier availability of skilled professionals. While just six states, viz., Andhra Pradesh, Telangana, Tamil Nadu, Karnataka, Maharashtra, and Gujarat, have nearly three-fourths (74%) of the operational SEZs, states like Bihar and most North-eastern States (four notified but, none operational) do not have a single operational SEZ. There is a bit of geographical skew here that needs to be remedied. The I.T. Sector reportedly is a dominant beneficiary of the SEZ policy (163 SEZs are IT/ITES). The initial anxiety to bolster exports and foreign exchange having been addressed, the Government of India is now seeking to overhaul the Special Economic Zones (SEZ) Act, 2005 to give more freedom to SEZ units to sell in the domestic markets. The Bill, being called the ‘Development of Enterprise and Service Hubs Bill’ (DESH) will possibly be a reform. The DESH Bill will likely enlist the State governments as key partners so the single-window-based clearances, land acquisition, regulatory regimes, and infrastructure are expedited.
With this background, let me open my premise that the Fruit Wines (non-grape wines) and Mead (wine made out of honey) industry can be a significant driving force for economic growth and tourism in our state. Let me list my reasons for thinking that a Wine SEZ will make a big difference to our farmers, entrepreneurs, government, and several stakeholders:
1. Meghalaya, with its five agro-climatic zones that range from sub-tropical to alpine, is endowed with extensive fruit biodiversity. Through the year we can expect a reasonable supply of a diverse range of fruits amenable to making wines unique to Meghalaya. Likewise, the floral diversity (important for nurturing honeybee populations) is also high. A study found that 107 floral species of Meghalaya are suitable for the honeybees to forage nectar. This is a natural advantage that cannot be easily challenged because not too many states can boast of such a floral or fruit tree diversity. The Department of Agriculture & Farmers’ Welfare can be immediately pressed into area expansion of various local fruits to ensure an adequate supply of these important flowering plants and fruits. We have the needed resources for that under the MIDH (Mission for Integrated Development of Horticulture). Undeniably, the predominant driver of Meghalaya’s economy is still agriculture and allied sectors, and farmers constitute 50% of the population of the state. Most of the native and unique fruits of Meghalaya are currently unutilized or under-utilized, or simply, wasted for want of demand. Sohiong, Sophie, and Sophoh Khasi are all highly suitable for winemaking but have hardly any demand for table purposes. So, the supply side can be taken care of.
2. Fruit wine-making will create a huge demand for local fruits and can potentially minimize wastage. Food processing unlocks wealth and minimizes losses. Diversifying and optimizing these natural resources of the state into winemaking will potentially double or triple the farmer incomes of the state. The story can go beyond Wines because the culture of processing several other commodities – Honey, Jackfruit, Mushroom, Turmeric, Ginger, and Spice crops like Black Pepper, Long Pepper, large Cardamom, etc will be triggered through a food processing SEZ. Data from wine regions globally indicate a significant increase in tourism following the establishment of vineyards and wineries. Napa Valley is synonymous with world-class wines, contributing significantly to the Californian and U.S. economies. Champagne region and Bordeaux (France), Tuscany (Italy), Mendoza (Argentina), and closer home, Nashik’s Wine tourist circuits are examples. Meghalaya too can anticipate a notable boost in tourism, potentially translating into crores of rupees in revenues and creating a substantive economic multiplier. A flourishing wine industry permeates every aspect of local life. Trade data also indicate that regions with dedicated economic geographies in the wine industry experience substantial growth in export revenues. The demand side too is not a constraint.
3. It is also time to rewrite the narrative relating to wines. The overwhelming idea that wine is necessarily an alcoholic beverage made only out of grapes needs to be de-bunked. Since the Government of Meghalaya has liberalized the excise policy to enable homemade wine production and marketing, the energies of our young entrepreneurs have found a new outlet. Globally, the grape vineyard surface area has come down from 7.7 million hectares in 2001 to 7.28 m.ha in 2022. Likewise, the global grape Wine production has come down from 294 million hectolitres (2018) to 258 mhl (2022). The global consumption of grape wines has come down by 2 mhl between 2021 and 2022. In just two years Grape wine consumption declined by 7% in the USA and by 14% in China. To put it bluntly, the future for grape wine is bleak and the sector needs a more indigenous, nutritious, diverse, and de-centralized economic alternative, through unique fruit wines. Act East policy and the Indo-Pacific economic initiatives are opening the south-east and far-east, for India, and exports through economic corridors will be the order in the next decade. Meanwhile, the false wine narrative advanced for centuries by the Europeans (Grape is native to Europe) needs to be rewritten by countries like India and a state like Meghalaya. As I write this, there are at least a dozen licenses taken by our entrepreneurs for winemaking and many of their fruit wines are slowly catching the market interest. Taj Vivanta serves our fruit wines, Marriot is enquiring, and we are showcasing our fruit wines at the global VINEXPO, SIAL, New Delhi this December, under the brand ‘Meghalaya’s Fruit Wines’.
4. Meghalaya’s population density is 132 against the national average of 434 (2011 census). So, the land-man ratio is favourable and we have large tracts of wastelands that can be usefully converted into SEZs without disrupting normal economic or social activities. The District Councils do have vast parcels of land that could be allocated to the SEZs. The District Councils also will benefit, because they can earn lease rentals regularly. It is unequivocally established that a direct correlation exists between SEZs and job creation. An exclusive Wine & Mead SEZ (or a food processing SEZ, as the case may be) could create hundreds of jobs across the state through the supply chain – collection, cultivation, aggregation, primary processing, packaging, branding, finished product marketing, logistics, and miscellaneous other services. The developmental spillovers due to SEZs are widely reported across the world.
By establishing a Wine & Mead SEZ, Meghalaya could tap into the lucrative international market and generate hundreds of jobs. Meghalaya’s journey toward economic prosperity through this initiative is an opportunity to craft a distinctive narrative, one that covers cultural preservation, sustainable practices, and economic growth. It’s time to raise a glass to Meghalaya’s unique and promising future. Fruit wines can create a future for our people – it is not a question of ‘if’, it is a question of ‘how soon?’ By when can we emerge as the national fruit wine capital and who will uncork that future?
(The writer is Chairman, Meghalaya Farmers’ (Empowerment) Commission)

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