I like my Merlot as much as anyone, but not - oof! - enough to die for. We're in India; more precisely, inside a Tata 4x4, crashing through craters and careering around bends on the mountain road to Narayangaon, five bone-shaking hours outside of Mumbai (formerly Bombay). It had seemed such a good idea 12 hours and 7,000 miles ago: a chance to inspect what sounded like a very modern kind of chimera - an Indian winery, no less, gathered around a fake plastic chateau. The winery started off making novelty sparkling stuff (the ubiquitous 'Bombay bubbly') but has latterly moved into still wines. All of which would be dandy if it weren't for the fact that Indians have traditionally drunk little alcohol and almost no wine. Either the man behind all this has spent way too much time in the midday sun, or else something is changing in the culture.

The land we pass through is beautiful. Impossibly lush valleys pour between perfect, tiger-striped peaks; add in the animals, lakes, vivid saris moving among every kind of crop, with flowers scattered around like little exclamation marks... But my bum hurts. We're late for this year's Chateau Indage wine festival and the man sitting next to me on the back seat is Sham Chougule, the could-be-nutter, would-be-genius responsible for it. The Maharashtra state Minister for Agriculture is attending for the first time and Chateau Indage's founder is terrified of not being there to greet him.

In the end, we arrive a few minutes early while the Minister rolls up an hour and half late. I feel like I've just crossed the finish line at Le Mans on a lawnmower. Luckily, there is a time-honoured remedy for my shredded nerves, and plenty of it to hand...

Chougule's story is remarkable. Born to a poor rural family, he had no education and was 13 before he saw his first car. Soon after that he made his way to Bombay, where he found he had a talent for selling things - 'and once you get the confidence, you can sell anything,' he observes with a smile. In 1967, he set up on his own, calling his company Indage, for Industrial Age, and finding success in a range of industrially-related activities. He is proud of the fact that he built his empire on his own and never borrowed money, 'at least not until I went into wine'.

It was while on engineering business in France that Chougule fell under the grape's spell and decided to bring wine and wine culture home. What he liked was the ritual. 'Every time you have a meeting, you open a bottle of wine. When you make a deal, you open a bottle of champagne. After a while, I started falling in love with it,' he explains.

The French said 'don't waste your time' and told him that good wine can't be made more than 30 degrees either side of the equator, but he persisted, reckoning that 'our country is so large, we will find the right conditions somewhere'. Foreign experts carried out lots of expensive tests and eventually agreed that this place might work, with its new dam bringing reliable irrigation. The trouble then was India's bizarre licensing laws which stipulated that Chougule could only make wine for export; if he wanted to sell wine to Indian people, he would have to ship it in bulk from abroad and merely bottle it on site. So the vines were planted in 1980, with the first harvest in 1983 and finished bottles of 'Omar Khayyam' bubbly appearing three years later. To complicate matters further, the bubbly is now processed and bottled in Germany from grapes shipped over in huge containers. Convention holds that the provenance of a wine is determined by where the grapes are grown.

Did he know that the break-even point wouldn't come for 20 years? Even the best consultants in the world had no experience of making wine in a tropical region. 'All the experts could do was learn at our expense,' Chougule notes ruefully.

What an elegant way of losing money, I marvel. 'Ha ha, yes,' he admits. 'The only reason for doing this is passion. I'm doing it because I love doing it.'

The winery nestles picturesquely into the side of a hill, looking both familiar and appealingly exotic, decorated with deeper and more intense sky, skin, fabric than you're used to seeing in this otherwise classical setting. In front of the estate house, the lawn is filling up with a crowd of expensively dressed Mumbai hipsters, while a corral of stalls proffer unlimited quantities of wine under a blistering sun. The few Brits on hand are lashing into it, but as a synthesiser band squelches into their reading of Lionel Richie's 'Hello', I notice that the locals are quaffing more gingerly and I decide to do the same. Tomorrow morning, there will be some excruciating hangovers in our party, produced by a relatively small amount of plonk. Like so much in India, the explanation for this is unclear.

Here, then, is the challenge: Indian culture is among the most open and generous on the planet and will readily accommodate anything that makes sense, but up to this point, wine hasn't. The local context is changing, though. There is now a wealthy, confident and travelled metropolitan elite in Mumbai who can out-British you at 50 paces and are looking to stake their place in an ever-shrinking world (just look at the renewed attempt to export Bollywood cinema). Wine speaks to them in a way it didn't to an earlier generation, which is why local papers reported 3,000 eager punters turning up to the Mumbai festival, despite the fact that no advertising of alcohol is permitted in India.

If wine is to have any democratic appeal, there is still a way to go, though. The men in charge of the stalls handle corkscrews much as you or I might a live cobra. Clearly, these are people who received their introduction to the wonderful world of wine not last year, or last week, but this morning. Local alcoholic mores are complex. Away from this festival, beer is drunk but considered low-rent; whisky is the chic option. A little to the north, the state of Gujarat is dry by law, but reputed to have the highest level of alcohol consumption in the country. A rough, medium dry wine called soma has been made in India with local grapes for 5,000 years, but is nowhere now.

This created problems for Chougule in the beginning. For a start, very few punters had the right glasses in which to consume his product. More problematic still, they didn't have corkscrews, and would be heard asking 'Do I drink this with soda or water?' Once that was ascertained, according to him, they would note that 'If I have a nip of whisky, I'm in a very good mood, but I drink a whole bottle of this champagne stuff and... nothing - it doesn't work!' To combat this, he wrote a guide book and started giving away corkscrews.

According to Mumbai-based cookery writer Karen Anand, who was raised in the UK, the indigenous cuisine is not necessarily an impediment to wine consumption. 'Indians do have a sweet tooth and they want a kick - a heavy Australian at 14 per cent is most acceptable. At the moment, drinking wine is still a question of social positioning which I don't think helps the cause much. But the thing to remember is that, with a population of 1.2 billion, the privileged class in India numbers 100 million people, which is a big market.'

It's hard to imagine wine ever being the perfect accompaniment to the wonderfully subtle vegetarian Maharashtra cuisine, with which nothing is usually drunk, not even water. But this may not matter. To the cosmopolitan elite, wine means sophistication, worldliness, a place on the global stage. In this respect, it is viewed in much the same way as India's nuclear weapons programme or hi-tech industry and, given that Chougule claims to own 75 per cent of a rapidly expanding market, success could see him becoming the Bill Gates of the wine trade. Suddenly it all makes sense.

The French winemakers in charge of the next vintages at Chateau Indage, the amiable Laurent Dubreuil and his girlfriend Mehaila, look on with detached Gallic amusement as the day unfolds; the French have little historical connection with India and are living in a state of permanent astonishment. Dubreuil tells me he is a flying winemaker. 'So wherever you lay your vat, that's your home?' I demand, a little pleased with myself, to be met with a look of pity and the information that, no, he can't teach me to do proper wine tasting, with the gargling and spitting and all that, in half an hour. He and his business partner, Silvain Fetzmann, who hails from the Latour dynasty, will prove to be a double act as dry as the driest burgundy.

What's the wine like? Now, I would never claim to be an expert, though I have an intimate knowledge of the £5-10 sector, but what I encounter at the first stall is appalling at any price. Only later do I realise that the Shiraz and Riesling I taste were produced in Australia and Germany for Indian consumption. Next to them, a Santa Rita Chilean Chardonnay tastes like Cameron Diaz's thigh.

A short distance away, however, stands a table with a selection of unmarked bottles that turn out to be last year's export product. Here, the highlight is a big, if slightly flat Merlot that could pass for a bottom-end Chilean, complemented by a Cabernet like a decent Bulgarian: it won't change anyone's life, but would be acceptable anywhere other than here, under this mocking sun. The Sauvignon tastes like hay and the Chardonnay has a steely finish that's not very charming, but both are still better than what I had before. Only the Bombay bubbly, which is a match for most £5-7 Aussie sparklers, distinguishes itself.

A little later, Laurent leads us through the fantastically kitsch chateau fa¿ade and into the Teletubbies interior of the winery for a sneak preview of what he's been doing. There is a big, juicy Shiraz and round, smoky, surprisingly complex Merlot; a blackcurranty but less eager, more sophisticated Cabernet. Superficially, the Sauvignon Blanc has the distinctive grassy, asparagus notes that you'd look for in a Kiwi ('Ah, very good!' Laurent responds delightedly to this observation), and the Chardonnay is fuller and fruitier than last year's, without the metallic 'finish'. His pride and joy is a Viognier that isn't ready yet, but may end up being rather good. He is surprisingly frank about last year's output. They lost confidence and resorted to blending, he frowns - a heresy which led to bland wine.

Back home, I think it wise to confirm my impressions with an independent expert who sampled the same stuff I did. Konrad Ejbich is president of the Wine Writers' Circle of Canada and (better still) a former Grateful Dead follower . 'I was surprised by the high quality,' he tells me. 'I was prepared for hot, alcoholic, unbalanced wines and found that they were not only balanced, but also nuanced, varietally pure and quite interesting. My deepest regret is that my likelihood of ever finding these wines again is minimal.'

So there you are. Perhaps India could be the new Chile, of at least Bulgaria. And last week, Chateau Indage workers and management alike were scattered by the consecutive visits of a prowling leopard and a black cobra, which in my book would justify the cost of a bottle even if it were empty. The irony is that the last people to benefit from this will be Indians, whose arcane duty system ensures that wine is available to only a select few. Both of Chougule's sons were educated at Dulwich College in south London and one now runs a trendy Asian-fusion restaurant - such as you might find in SE24, in fact - in Mumbai. Sitting next to Silvain Fetzmann as we take a look at the place, I comment that, for customers unused to drinking wine with their food, driving home might be a problem.

'Oh no, getting home is no problem,' he says. 'If you can afford a bottle of wine in a restaurant here, you have a driver. What you pay for a bottle in a restaurant will cover a driver's wages for two months.'

Then he can't resist adding some perspective: 'But don't forget that, 20 years ago, all you British had was Liebfraumilch and Piat d'Or. Now look at you. Haw-haw.'