Do not reduce liquor quota to 1 from 2: ACI to India

Airports Council International (ACI) Asia-Pacific has also requested India to not reduce the quota of liquor bottle that an international flier is allowed to buy at duty-free stores at airports.
“The Ministry’s (commerce) proposal is inconsistent with the government’s fruitful efforts to date to incentivise private capital in the public sector and will damage the growth trajectory of Indian airports and duty-free providers,” said a statement from ACI.

A recent proposal by the commerce ministry restricts purchase of tax-free alcohol at airport duty-free shops to one 1-liter bottle from 2 litres currently and restricts the purchase of cigarette cartons at these shops.

“We urge the authorities to reject this proposal. Not only is it inconsistent with the latest attempts by the government to incentivize private capital to invest in the airport industry but it undermines the growth opportunity for Indian airports and duty-free providers who are a driving force in the local airport economy,” Stefano Baronci, Director General, ACI Asia-Pacific was quoted in the release.

“Duty-free operators must be able to count on the expansion of airport infrastructure along with new retail space and a regulatory framework that incentivizes the market to grow. Unfortunately, the Ministry’s proposal will limit this objective if airports cannot generate non-aeronautical revenues to cover aeronautical cost,” Baronci was further quoted.

The council also states that the latest privatisation bids were set on the grounds that investors could enjoy full freedom to generate commercial revenues at the airport. The ministry’s proposal to reduce the import of duty-free goods runs the risk of having the opposite effect because it neglects the potential adverse impact it may have on the growth of commercial business.

According to the 2018 World Air Traffic Report published by ACI, passenger traffic in India will grow by 6.1% every year until 2040. Within an unconstrained scenario, it is forecasted that the spending in duty-free and travel retail will grow 20% to US$2.1 billion in 2022*, it said.