Commerce Ministry proposes reducing duty-free liquor allowance

Commerce Ministry proposes reducing duty-free liquor allowance

A proposal by the Commerce Ministry to restrict the purchase of alcohol to just 1 bottle instead of 2 has raised some concerns among aviation authorities, especially the Airports Authority of India (AAI). It is said that private airport operators along with the AAI are going to petition the government to reconsider this proposal. This comes at a time when the Association of Private Airport Operators (APAO) recommended increasing the current alcohol allowance from two bottles to four. 

The reduction of alcohol allowance at duty free shops in Indian airports will directly impact the passengers as the loss of revenue will have to be compensated somehow. So if this move is implemented, flyers can expect ticket costs to surge. This is also because airports run primarily on non-aeronautical income such as duty free shops, restaurants, cafes and so on. 

The AAI mentions that the reduced liquor allowance will mean an increase in landing and parking charges on airlines, which they will happily pass on to their customers. It’s clear that a loss of revenue doesn’t help anyone. 

Meanwhile, Commerce and Railways Minister Piyush Goyal said “It’s not a question of large or small (quantities). As a nation, we are not encouraging the import of alcohol.”

Not everyone agrees with the Commerce Minister, however. “It will be a big blow to duty-free companies and airports. Duty-free sales are an important component of non-aeronautical revenues for airports and 30 per cent of the non-aero revenue is used to cross-subsidise aeronautical charges,” a CEO of a private airport said.

This move may also have a negative impact on upcoming investments, particularly from the likes of Adani Airports, which won contracts for six new airports recently. While several contractors have bid on airport projects across the country, they have also factored in revenue generated from duty free liquor sales. So this move by the Commerce Ministry may lead to the contractors changing their revenue model or reworking the plans altogether.