Travelers to India could soon find their duty-free shopping quotas curtailed. According to recent reports, the country’s ministry of commerce and industry is looking to restrict the inbound liquor allowance to one bottle per person, and ban the purchase of cigarette cartons at duty-free altogether.
Currently, passengers flying to India are permitted to bring two litres of alcohol and 100 cigarettes into the country. The proposal – which will be confirmed or disregarded when the finance minister reveals the 2020-21 budget on 1 February – would bring the quotas in line with countries like the US, the UK, and Hong Kong while moving them further away from regional neighbours like Thailand and Dubai.
The government sees the potential change as a way to rein in the trade deficit by limiting the influx of nonessential goods and raising import duties – a move that would, in theory, give the domestic industry a boost, while simultaneously cutting back on the quantities of “sin goods” permitted.
“It’s not a question of large or small [quantities]. Even under [the goods and services tax], while alcohol is not included, tobacco is a sin good. As a nation, we are not encouraging the import of alcohol,” commerce and industry minister Piyush Goyal told the Times of India. “All that we have done is highlighted that these are global best practices. I am not sure if India can afford to be so liberal, particularly when it relates to liquor and cigarettes.”
However, critics say that the optics of a perceived return to a protectionist economy could offset any potential benefits, with the liquor industry quick to register its objections. “This will have close to ‘zero impact’ on the revenue/balance of trade / foreign exchange outflow etc. of an economy the size of India. However, it will have a major negative impact on sentiment,” Amrit Kiran Singh, executive chairman of International Spirits and Wines Association of India told Business Insider last week.
Prior to this development, airport operators had actually been pushing for an increased duty-free limit. “Liquor allowance given in India is not on par with liquor allowance in neighbouring countries/Asia Pacific countries,” the Association of Private Airport Operators reportedly said in its pre-budget submission. And as an unnamed airport executive told the Economic Times, increasing the duty-free liquor quota would help Indian airports’ revenue as a whole. “The whole idea is that the sales of Indian duty-free shops increase,” he said.
