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Airports pitch for relaxed alcohol, duty-free allowances

Airports pitch for relaxed alcohol, duty-free allowances

New Delhi: India’s largest airports want to sell more spirits and wine at shops inside their facilities and have sought a relaxation in duty-free limits in the upcoming budget.

India currently allows 2 litres of spirits or wine per passenger. That should be changed to allow 2 litres of spirits and the same amount of wine, according to a letter written by industry lobby group Association of Private Airport Operators (APAO) to finance minister Pranab Mukherjee.

The grouping includes operators of the airports in New Delhi, Mumbai, Hyderabad, Bangalore and Kochi, which account for 65% of passenger traffic. Alcohol, cigarettes, cosmetics, perfumes and chocolates comprise a bulk of purchases from duty free shops, analysts said.

“To be in competition with some of these tourist-friendly countries, it would be appropriate for government of India to allow duty free import of two litres of liquor plus two litres of wine in India, provided the articles are purchased only at Indian duty-free shops," APAO secretary general Satyan Nayar wrote in the 10 January letter reviewed by Mint.

Mukherjee is scheduled to present the Union Budget later this month.

The average amount spent by Indian travellers per trip has risen 32% from $903 (Rs41,538) in 2006 to $1,200 in 2009, according to APAO. Only 3% of this, or around $35, is spent at Indian duty free shops.

The airports also want the duty free allowance doubled to Rs50,000 from Rs25,000.

“This would also help the country to retain the foreign exchange which the traveller would otherwise spend abroad. This is not happening because the traveller is unable to do most of his shopping on arrival as his shopping basket already exceeds the duty free allowance of Rs25,000," Nayar said, adding this would encourage travellers to do “most of their duty-free shopping on arrival in India".

While there are several other demands made by the airport operators, alcohol is the key one. “Liquor is the major element of duty-free sales. Liquor and cigarettes constitute the biggest chunks besides cosmetics, perfumes and chocolates," said Kapil Kaul, South Asia CEO of Centre for Asia Pacific Aviation.

Nearly 37 million international passengers travelled to and from India in 2010, out of which 11 million were inbound while 26 million travelled out of the country.

Nimish Gupta, 36, who works as senior product manager at anti-virus software maker McAfee’s Bangalore office and uses Singapore and Dubai to connect with San Francisco for his international travel, agrees that alcohol is the only item he tends to buy from duty-free shops.

“The main reason to buy back in India (on arrival) is that you don’t have to lug the bottles around and past security checks," he said. “A quick nip over to duty-free, buy the stuff, and back to pick up your bags—very convenient."

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