Commerce Ministry Wants Curbs Imposed on Duty-Free Sale of Alcohol, Tobacco Products

There may be tighter curbs on duty-free shopping at India’s airports if a proposal from the Commerce and Industry Ministry for Budget 2020-21 to restrict alcohol and tobacco sales gets accepted.

Per the proposal sent to the Finance Ministry, the limit on the purchase of foreign wines and spirits at duty-free shops should be halved to just a single 1-litre bottle per international traveller arriving at airports in India. Also, it wants duty-free sale of tobacco to be completely stopped, according to an official.

The Revenue Department under the Finance Ministry, however, has not yet given its approval to the proposal which, if implemented, is likely to be unpopular with air travellers.

Duty-free liquor sale, estimated at about $200 million in 2017, could increase to about $800 million by 2025, according to a report by Bengaluru-based RedSeer Consultant. India’s import duty on alcoholic beverages is about 150 per cent, while that on tobacco products is about 100 per cent. If duty-free allowance is halved, customers would need to pay high duties to buy foreign liquor.

No correlation?

However, industry experts say that curbing duty-free purchases may not automatically result in higher revenue collection.