Mumbai: Private airports are up in arms over a Commerce Ministry proposal to cut back on duty-free sale, saying it would cost them Rs 650 crore per annum in lost revenue.
The ministry is proposing to limit booze purchases at airport duty-free shops from two litres to one litre and restrict import of cigarettes, presently one carton of 100 sticks.
The Association of Private Airport Operators (APAO) said in a statement that the move will have a "disastrous" effect on the domestic aviation industry.
The Commerce Ministry presented its proposal to the Finance Ministry ahead of the annual budget on February 1, recommending restricting purchase of tax-free alcohol at duty-free shops to one bottle as part of steps to reduce import of non-essential goods.
Purchase of cigarette cartons at duty-free shops is sought to be prohibited altogether.
APAO says this will be disastrous for all Indian aviation stakeholders: airports, airlines, passengers, duty-free operators.
According to the association, the restrictions will lead to an increase in passenger charges and may encourage smuggling, besides a revenue loss to airports of about Rs 650 crore per annum.
Duty-free sale of alcohol stands at around US$ 97 million as against country's total import bill of US$ 460 billion, according to APAO.
The revenue loss at airports will impact airport companies' financial ratings and consequently hamper expansion, it said.
The proposal, if accepted, will increase aeronautical charges to the tune of Rs 200 crore per annum, which in turn will lead to higher air ticket prices, it added.