NEW DELHI, Jan 21: The Association of Private Airports Operators (APAO) on Tuesday opposed the Government’s restrictions on Duty Free Sales at all Indian airports, saying it will lead to increase in passenger charges and may encourage smuggling.
Recently, the Commerce and Industry Ministry has proposed to allow a passenger to buy only one liquor bottle — instead of two at present ? and a complete ban on sale of cigarettes through Duty Free stores ? instead of one carton of 100 sticks at present.
According to the Association, the move will harm the entire aviation ecosystem comprising airports, airlines, duty free operators and AAI and does not help in any way in improvement in balance of payments.
It said 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.
The Association elaborated that present limit of Rs 50,000 was Rs 25,000 in the year 2004. Considering Rupee depreciation vis-a-vis dollar, of 162 per cent during the said period, in real terms limit is reduced by 23 per cent which will further reduce considering dollar inflation.
At most Indian airports, it said, Duty Free revenues make up 15-20 per cent of the total non-aero revenues and sales of liquor and cigarettes together account for over 75-80 per cent of overall Duty Free sales and to make up the revenue loss on account of these new restrictions, the Aeronautical Charges will have to increase which will have to be borne by airlines and passengers.
It is estimated that the Aero Charges will go up by at least around Rs 200 crore annually across India which will have an impact on ticket prices and may even impact the growth in passenger traffic which is already extremely subdued.
The reduction of duty-free allowance will also adversely impact Airports Authority of India (AAI) which will not only lose revenue from the airports it operates but also from the revenue share from Delhi and Mumbai airports.
The AAI would lose more than Rs 330 crore (Rs 180 crore from its operations and Rs 150 crore due to reduction in revenue share payments from DIAL and MIAL). This will reduce AAI’s ability to develop airports in remote and rural areas, upgrade airport infrastructure and regional connectivity which is hallmark of the NCAP 2016.
(UNI)
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