Indian airports are likely to incur a revenue loss of ₹650 crore per annum if the reported recommendations of the Commerce Ministry on duty-free sales are put in place, private airports operators body APAO said on Tuesday.

Vehemently opposing the proposed move to reduce liquor allowance from two litres to one litre and to do away with import of cigarettes presently one carton of 100 sticks, the Association of Private Airport Operators (APAO) in a statement said the move will have “disastrous” effect on the domestic aviation industry.

The Commerce Ministry, as part of its proposals to the Finance Ministry ahead of the budget, has recommended restricting purchase of tax-free alcohol to one bottle at duty-free shops as part of steps to reduce import of non-essential goods, sources had said earlier. It has also recommended to prohibit purchase of cigarette cartons at duty-free shops.

“Such a move will have disastrous effects on the Indian aviation industry across all stakeholders including airports, airlines, passengers and duty-free operators,” APAO said.

According to the Association, the proposed restrictions will lead to increase in passenger charges, hurt airport industry and may “encourage smuggling,” besides a revenue loss of about ₹650 crore per annum at all airports.

Current imports

Liquor imports for duty-free sale stands at around $97 million as against country’s total import bill of $460 billion, according to the APAO. The revenue loss at airports will impact the operators’ financial ratings and consequently hamper expansion plans, it said.

The proposal, if accepted will increase in aeronautical charges of around ₹200 crore per annum, which in turn, will lead to higher air ticket prices, it added.

The APAO also said it expects an estimated annual loss of ₹330 crore to the national airports operator AAI due to the proposed restrictions while it may also result in around 8,000-10,000 job losses.

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