Proposed cut in duty-free liquor, cigarettes to cause Rs 650 crore/year

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Indian airports are likely to incur a revenue loss of Rs 650 crore per annum if the reported recommendations of the Commerce Ministry on duty-free sales are put in place, private airport operators body APAO said on Tuesday.
Vehemently opposing the proposed move to reduce liquor allowance from two litres to one litre and to do away with the import of cigarettes presently one carton of 100 sticks, the Association of Private Airport Operators (APAO) in a statement said the move will have "disastrous" effect on the domestic aviation industry.

The Commerce Ministry, as part of its proposals to the finance ministry ahead of the budget, has recommended restricting the purchase of tax-free alcohol to one bottle at duty-free shops as part of steps to reduce import of non-essential goods, sources had said earlier.

The ministry, as per the sources, has also recommended to the Finance Ministry that the purchase of cigarette cartons at duty-free shops should be prohibited. "Such a move will have disastrous effects on the Indian aviation industry across all stakeholders including airports, airlines, passengers and duty-free operators," APAO said.

According to the Association, the proposed restrictions will lead to an increase in passenger charges, hurt the airport industry and may "encourage smuggling," besides a revenue loss of about Rs 650 crore per annum at all airports.
Liquor imports for duty-free sale stand at around USD 97 million as against the country's total import bill of USD 460 billion, according to the APAO. The revenue loss at airports will impact the operators' financial ratings and consequently hamper expansion plans, it said.

The proposal, if accepted will increase in aeronautical charges of around Rs 200 crore per annum, which in turn, will lead to higher air ticket prices, it added.

The APAO also said it expects an estimated annual loss of Rs 330 crore to the national airport's operator AAI due to the proposed restrictions while it may also result in around 8,000-10,000 job losses.

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