New Delhi, Feb. 12 -- As India prepares to cut steep import duties on European wines under the trade deal signed with the European Union (EU) last month, Indian wine brands say they are bracing for tougher competition from imported labels that could soon be priced closer to Indian bottles.

India currently levies a steep 150% duty on imported wines. Under the pact, that will be reduced to 75% and eventually to as low as 20% for premium wines and 30% for mid-range wines, according to an official release by the European Commission. The phased reductions are expected to narrow the price gap between French, Spanish and Italian wines and locally produced brands.

That narrowing price gap worries domestic winemakers, who say imported brands car...