Taxing that extra bottle can wait
The commerce ministry has suggested, as part of its Budget recommendations to the finance ministry, that people be allowed to buy just one litre (or a bottle) of liquor at duty-free shops when they enter India, down from the current two litres. It also wants to bar the purchase of cigarettes at duty-free shops for people entering India. Both measures are ostensibly aimed at minimising the quantum of non-essential imports, and also adopting the prevailing rules in some other countries. The United States and Singapore, for instance, allow only one litre of liquor to be bought into the country, although the latter also allows a litre of beer and a litre of wine in addition. Singapore bars the purchase of cigarettes at duty-free shops by people entering the country, although the US allows the purchase of up to a carton.
But it isn’t clear why the ministry has made the suggestion on limiting duty-free liquor purchases now; nor is it clear how much revenue the government foregoes because of the sale of liquor in duty-free shops. While applicable only to the minority of Indians that travels abroad, around 50 million by some estimates (and this probably includes some amount of duplication), the move is likely to be hugely unpopular. Unlike the 1990s and perhaps even the 2000s and part of the 2010s, it isn’t as much about availability now as it is about prices. And for many Indians travelling abroad, especially on pleasure, the duty-free shopping bargain, especially for liquor, is definitely part of the whole experience.
Unfortunately, the suggestion — it is still that — reflects a focus on minutiae that does not help the government’s image. There are more pressing problems that the commerce ministry needs to address, starting with ways to revive India’s export growth. Taxing that extra bottle can wait.