New Delhi: India may only reduce its duty-free import bill by around $50 million if the Modi government accepts the proposal of the commerce ministry to halve the duty-free import quota for alcohol. This only accounts for 0.01 per cent of India’s total import bill of more than $500 billion in 2018-19.
According to data compiled by the Association of Private Airport Operators, liquor imports for duty-free sales amounted to around $97 million — or 0.02 per cent of total imports in 2018-19 — for all international airports operating in India, run by both private operators as well as the Airport Authority of India.
India allows the purchase of two litres of duty-free alcohol per passenger but has now proposed to limit it to one litre. Curbs are also proposed on import of cigarettes. At present, one carton of 100 sticks is allowed to be imported duty free.
To be sure, the calculation of $50 million assumes that most passengers exhaust their 2 litre quota allocation though some passengers may not be exhausting their quota.
The government’s move is aimed at limiting imports of sin goods as well as aligning the Indian standards to global norms, Commerce and Industry Minister Piyush Goyal was quoted by The Times of India as saying.
He added that India as a country cannot afford to be liberal when it comes to liquor and cigarettes. India’s forex reserves were at a record $461 billion, sufficient to finance nearly a year’s imports.
The finance ministry will have the final say on the commerce ministry’s proposal.
Also read: How a decade of drinking changed the future of booze
Airport operators want limit doubled
The commerce ministry proposal comes at a time when private airport operators had sought doubling the existing two litres alcohol allowance to four litres. The APAO, whose members include international airports in Bengaluru, Cochin, Delhi, Goa, Hyderabad and Mumbai, has opposed the move to reduce the allowance suggesting that such a move could enhance smuggling of imported liquor and encourage passengers to buy more at departure airports globally.
In a statement on Tuesday, APAO said that at most Indian airports, duty-free revenues make up 15-20 per cent of the total non-aero revenues.
“Sales of liquor and cigarettes together account for over 75-80% of overall duty free sales and to make up the revenue loss on account of these new restrictions, the aeronautical charges will have to increase, which will have to be borne by airlines and passengers,” it added.
APAO estimates that airports could incur losses of Rs 650 crore annually and it could lead to 10,000 job losses.
The statement warned that the revenue loss will also impact the Indian airports financial performance, their rating, ability to raise funding for future expansion and could potentially lead to NPAs with banks.
APAO has also estimated that the Airports Authority of India also stands to lose nearly Rs 330 crore from such a move.
Also read: Limiting duty-free alcohol purchase is regressive. Govt must focus on bigger goals
There are three things,
A. Quality. The chances of fake liquor at DFS is minimal. It’s way riskier outside. There are also special DF editions which are not sold outside.
B. Actual price will be way higher. There are bottles which are sold for 3 or 4k at the DFS, but same will cost 15-16k outside.
C. Benefit to the government and country. It is clear that this move will not help the duty figures in any meaningful way. It will however be pretty bitter for travelers who consider this as perks of traveling
Very confusing report. When the amount of tax foregone is so small, then how the total business can affect viability of the airport itself? Anyone who travels abroad has to be considered good enough to pay usual customs duty on liquor and cigarettes. In fact, why allow even one litre free? Within the total free allowance, every passenger should manage.
It’s to attract stores which are very expensive in airports
Do example
If you open a store that costs 10 crore a year that money goes to airport authority