EU duty-free buy rule irks retailers

A new rule by the European Union (EU) on duty-free purchases has raised strong protests from India's duty-free retail owners.

The rule stipulates that travellers from only those airports that have gone through audit and security checks by the EU's transport officials will be permitted to bring duty-free items they are carrying into Europe while on transit flights.

This means travellers transiting through Europe from India will not be allowed to carry duty-free items bought at Indian duty-free shops.

The Indian Duty-Free Association has already taken up the matter with the aviation ministry, asking them to reject the EU diktat.

"What is the locus standi of the EU to take unilateral decisions and direct us to go for scrutiny of our airports? The International Civil Aviation Organisation (ICAO), which is the international body for aviation, has framed guidelines on how passengers should carry their duty-free purchases (in transparent plastic packs). This matter has to be undertaken by consensus," said a member of the association.

Sales from passengers departing to foreign countries account for 70 per cent of duty-free sales in India (from 15 airports). Duty-free shops clock annual sales of over Rs 500 crore, and prices of Indian liquor and perfumes are at least 15 per cent cheaper than in European duty-free shops.

The EU regulation, which has been agreed on by its members this week, has to be ratified. The regulation states that countries as well as airports have to formally apply for safety clearance and these will be audited by transport officials in the order they are received.

At present, a traveller flying from Delhi to New York via Frankfurt, for example, will find the perfume or liquor from an Indian duty-free outlet will be confiscated in Frankfurt and not allowed on the transit flight to New York. Over half the travellers from India to Europe are transit passengers.

The civil aviation ministry, which recently received one of the highest ratings for the country's security preparedness in airports by the ICAO, is in a quandary. "Different countries have different security norms, and we are looking at the issue before taking a call," said an official involved with security in the aviation ministry.

To protect their duty-free business, numerous countries, such as Australia, have imposed restrictions on incoming flights to their countries.

Duty-free operators said by making it virtually impossible for travellers to get anything into Australian airports, the Australian government had ensured the loss in revenue from departure duty-free shopping was neutralised by an increase in arrival revenues.