Industry
Airports want govt to allow sale of Indian liquor at duty-free shops
Summary
- The request is part of a set of Budget recommendations from the Association of Private Airport Operators
Flyers in India might get to buy popular Indian liquor brands such as Indri and Amrut at duty-free shops across the country, if the government agrees to such a request from private airport operators. Wine and spirits are ranked third in terms of sales at duty-free shops, according to Mordor Intelligence, a market research firm; fashion and accessories, and jewellery and watches are the top two categories.
The request is part of a set of Budget recommendations from the Association of Private Airport Operators (APAO). “Duty-free operators should be allowed to sell domestic Indian liquor at departures tax-free. This should be treated as exports. It will improve the brand image of Indian manufactured liquor in foreign markets," the recommendation reads.
This request comes at a time when Indian whisky brands are winning accolades across the globe. Early last month, Indri won the ‘best whisky in the world’ award based on blind tasting in an annual competition organized by Whiskies of the World Awards 2023, where more than 100 whiskies from across the globe were evaluated.
The move to allow Indian whiskies at duty-free shops would also help create a market for them in some key global markets. Experts say India’s export opportunity is limited to certain countries in the Middle East, Africa and the Far East. But Indian whiskies have not been able to reach key markets in Europe and the Americas due to issues like a fee on the export of alcoholic beverages, and because non-tariff barriers restrict such exports to the European Union and the UK.
Another significant barrier is the requirement of grain-based spirit in those markets, something that Indian companies can’t fulfil as liquor here is made from molasses.
Industry data sourced from the government shows India’s whisky exports were at $124 million in FY23, which is 10% higher than $112.4 million in FY14, but lower than the $127.8 million exported in FY21.
Among other recommendations by APAO are doubling the purchase limit on duty-free alcohol to four bottles from two currently, and doubling free baggage allowance, set in 2016, to ₹1 lakh.
The sector has also sought categorization of airports under priority-sector lending. “Airport construction requires huge investment and a long gestation period. A short period of loan availability coupled with a high interest rate results in a huge financial cost and cash flow mismatch for airport operations. Categorization of loans to airports under priority-sector lending is needed to reduce overall finance cost for such large infrastructure projects," read the APAO request.
Currently, loans provided by institutions for airport construction are classified under the general category, which leads to shorter repayment tenure of 10-14 years with a high interest rate. Inclusion in the priority sector would change that to a longer repayment period of up to 20 years and lower interest rates as well.
Notably, these recommendations have been made at a time when the country’s travel retail market is set to grow by about 22% from $1.67 billion in 2023 to $4.43 billion in 2028, according to estimates by Mordor Intelligence.
