New Delhi: This may be bad news for air travellers who look forward to a visit to a duty-free shop with the same zeal as a jaunt in their foreign locale. Playing the proverbial spoiler, the Commerce Ministry has proposed restricting purchase of liquor at duty-free shops to one bottle.
In addition, it has also recommended to the Finance Ministry that purchase of cigarette cartons at duty-free shops should be banned. These recommendations have been made in the run-up to preparations of the Union Budget.
As per the current practice, inbound international passengers are allowed to buy two litres of alcohol and a carton of cigarette from these shops.
There are countries that allow only one litre of liquor to international passengers and the same practice can be adopted in India, it has been suggested.
This proposal is significant as the government is looking at ways to curtail import of non-essential goods to rein in the trade deficit. These measures are part of a larger strategy to reduce imports and raise import duties, which, in turn, will benefit the domestic industry and help in employment generation.
Reducing non-essential imports cuts the trade deficit but the projection of India as a protectionist economy can also hurt international optics for foreign investment.
While countries have been opening up controls for the last couple of years there have been protectionist tendencies even in large economies like the United States.
A duty-free shop is where an inbound international passenger can generally purchase goods worth about Rs 50,000 without paying any import duty.