Commerce ministry moots limiting liquor purchase to 1 bottle at duty-free shops

New Delhi: International travellers may be able to add just a single litre of liquor to their carts at an Indian airport duty-free shop next time they return from an overseas trip, as against the two litres allowed now. Cigarettes may also vanish from the duty-free shelves.

The measures are part of a set of proposals prepared by the commerce ministry to reduce imports of non-essential items. If accepted, finance minister Nirmala Sitharaman could announce them in the Union budget on 1 February.

“This is part of our drive to reduce unnecessary imports. We have also recommended to the finance ministry a hike in duties on 200 items we consider non-essential,” a commerce ministry official said on condition of anonymity.

The proposals are aimed at boosting India’s manufacturing exports to create more jobs and limit non-essential imports to narrow its trade deficit with countries such as China.

An official of the Association of Private Airport Operators said that contrary to the commerce ministry’s move, the association in its budget proposal to the finance ministry had asked the government to increase the cap on liquor purchases in duty-free shops from 2 litres to 4 litres. “We are competing with duty-free shops in Malaysia, Dubai and Singapore. If travellers are going to buy from other duty-free shops, we are the losers. Government should worry about people buying at duty-free shops in other countries, not in India,” he said on condition of anonymity.

The association has also proposed doubling the baggage allowance at a duty-free shop in India from ₹50,000 at present to ₹1 lakh, which could lead to increased foreign exchange earnings.

Duty-free shops are licensed as a “private warehouse’ under Section 58 of the Customs Act, 1962. In a report released in 2017, Bengaluru-based RedSeer Consulting estimated that India’s duty-free market could quadruple to $800 million by 2025 from $200 million during the survey year, fuelled by “rising spending power of the middle class, increasing foreign tourist arrivals, and high-growth phase of Indian airports”.

The report said the Indian duty-free market is different from its peers, as 80% of the consumers are locals.

“Pre-orders are most famous for these Indian travellers. The customer places an order before leaving for an overseas destination and the order is delivered on his/her return at 5-10% discount. It is cheaper, saves the passenger from carrying extra luggage and reduces shopping time after an exhausting trip,” said the report.