Commerce ministry proposes curbs on duty-free shops
20 January 2020
The commerce ministry has proposed curbs on duty-free sale of alcohol, tobacco products etc at airports. This is one of the suggestions made by the ministry for Budget 2020-21.
In its proposal sent to the finance ministry, the commerce ministry has suggested limiting the purchase of foreign wines and spirits at duty-free shops to just a single 1-litre bottle per international traveller arriving at airports in India. It has also proposed a complete ban on tobacco sales at duty-free shops.
While the proposal may prove to be unpopular with air travellers and could encourage them to buy liquor, it is unlikely to affect the air transport industry in any way. The revenue department, however, has not yet given its approval to the proposal.
The curbs may help the government plug some revenue leakage, as the sale of foreign liquor and tobacco at duty-free shops is rising sharply. If people want to enjoy imported liquor and tobacco they should be willing to pay for it the same way domestic consumers pay for such luxuries.
The sale of duty-free liquor is estimated to rise from about $200 million in 2017 to about $800 million by 2025, according to some reports.
The government imposes 150 per cent import duty on alcoholic beverages and 100 per cent on tobacco products.
While curbs on duty-free purchases may not automatically result in higher revenue collection, it may help curb alcohol consumption. Most travellers buy foreign liquor and cigarettes at airports only because these are available duty-free.
If the commerce and industry ministry proposals for Budget 2020-21 get accepted there could be tighter curbs on duty-free shopping at airports.