Indian liquor makers and airports are in low spirits over duty free shopping restrictions

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Indian liquor makers and airports are in low spirits over duty free shopping restrictions
  • The Commerce Ministry recommended that only one bottle per person would be allowed at duty free, while buying cigarette cartons would be prohibited.
  • An IANS report states that the proposed move would result in an annual revenue loss to the tune of ₹650 crore to the airport sector.
  • The move will be detrimental to the liquor companies as duty free is an additional source of business for them.
Whether you are travelling abroad or a friend is flying back to India, a trip to the duty free shops is certified. Indians stock up their bars with fancy bottles from duty free and cigarette cartons. But soon, that might not be possible.

In the upcoming budget, the government might restrict the number of bottles you carry. According to reports, the Commerce Ministry has recommended that only one bottle per person would be allowed at duty free, while buying cigarette cartons would be prohibited.

An IANS report states that the proposed move would result in an annual revenue loss to the tune of ₹650 crore to the airport sector.

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The alcohol industry is also up in arms against the move. “This will have close to ‘zero impact’ on the revenue / balance of trade / foreign exchange outflow etc. of an economy of the size of India. However, it will have a major negative impact on sentiment,” said Amrit Kiran Singh, Executive Chairman, International Spirits and Wines Association of India’ (ISWAI).

The ISWAI represents liquor companies like Diageo – United Spirits, Pernod Ricard, Moet Hennessy, Beam Suntory, Bacardi, and many more.

Singh believes that the move will be detrimental to the liquor companies as duty free is an additional source of business for them. “The proposed move of reducing the duty free allowance from 2 Litres to 1 litre will break the back of this channel as over 75% of this channel is contributed by alcoholic beverages. Reducing 75% of this channel by 50% will break the back of this channel,” he said.

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The Ministry has recommended the move to bring India’s duty free allowance at par with airports around the world. However, industry experts believe that it is unfair to compare the duty free allowance of India with other countries as India has the highest Basic Customs Duty (BCD) on alcoholic beverages at 150%.

“China is less than 30%. Companies therefore use the Duty Free channel to launch their upmarket brands. Duty Free allows potential customers to try the new brand at a lower price (due to zero duties) and then buy it at full price (with 150%) duty if they like the brand. It, therefore, plays an important role in stimulating demand in the local economy,” said Singh.

In fact, in December 2019, airport operators had called for a higher limit of duty free allowance in India. The airports body had also written recommendations to the government ahead of the budget. "Liquor allowance given in India is not at a par with liquor allowance in neighbouring countries/Asia Pacific countries," the airports body told IANS.

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(With inputs from IANS)

See also:
India’s iconic budget announcements through the years that changed the economy
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