Recent media articles have reported that the Ministry of Commerce & Industry has recommended a reduction in per passenger allowance of import of liquor at arrival Duty Free stores at all Indian airports, along with a complete ban on sale of cigarettes through Duty Free stores. Such a move will have disastrous effects on the Indian Aviation Industry across all stakeholders including airports, airlines, passengers and Duty-Free operators.
APAO has vehemently opposed the proposed move to reduce liquor allowance from 2 litres to 1 litre and to do away with import of cigarettes presently one carton of 100 sticks.
As per APAO, it will harm the entire aviation ecosystem comprising of airports, airlines, duty free operators and AAI and does not help in any way in improvement in balance of payments. Share of import of liquor for sale to arrival passengers in total import is miniscule i.e. 0.0213%. Even doing away with entire imports will not serve any purpose. The same ministry is recommending reduction in import duty on gold to mitigate illegal import. With the same logic the proposal will enhance smuggling of imported liquor and encourage passengers to buy more at departure airports globally, resulting in higher foreign exchange outflow.
Another argument given by the APAO is that liquor import is within the overall limit of Rs. 50,000 available to passengers and hence any reduction in liquor quota will result in shift to import of other items thereby making the entire exercise to improve balance of payments ineffective.
APAO elaborated that present limit of ₹50,000 was ₹25,000 in the year 2004. Considering rupee depreciation vis-à-vis USD, of 162% during the said period, in real terms limit is reduced by 23% which will further reduce considering USD inflation.
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