The proposal mooted by the Commerce Ministry in its budget recommendations for Union Budget 2020-21 could also result in loss of 8,000 to 10,000 jobs.
Association of Private Airport Operators (APAO) has said that share of import of liquor for sale to arrival passengers in total imports is a mere 0.0213 per cent and hence doing away with even entire imports will not serve any purpose.
"The same ministry (commerce) is recommending reduction in import duty on gold to mitigate illegal imports. With the same logic the proposal will enhance smuggling of imported liquor and encourage passengers to buy more at departure airports globally, resulting in higher foreign exchange outflow," the APAO said.
At most Indian airports, duty-free revenues make up 15-20 per cent of the total non-aero revenues and sales of liquor and cigarettes together account for over 75-80 per cent of overall duty free sales.
The airport body said that the sector regulator would have to compensate for the losses on account of reduction in liquor quota by raising airport land and parking charges.
"It is estimated that the aero charges will go up by at least around Rs 200 crore annually across India which will have an impact on ticket prices and may even impact the growth in passenger traffic which is already extremely subdued," APAO said.
It argued that reduction of duty-free allowance will also adversely impact Airports Authority of India (AAI) which will not only lose revenue from the airports it operates but also from the revenue share from Delhi and Mumbai airports. It is estimated that AAI would lose over Rs 330 crore (Rs 180 crore from its operations and Rs 150 crore due to reduction in revenue share payments from DIAL and MIAL).
"This will reduce AAI's ability to develop airports in remote and rural areas, upgrade airport infrastructure and regional connectivity which is a hallmark of the NCAP 2016," the industry body said.
Revenue loss at airports will impact airport operators' financial ratings and consequently hamper expansion plans, it noted.
Seeking to bring liquor allowance at par with countries like Thailand, Singapore and Dubai, APAO had earlier proposed to double its limit to four litres per person for purchase from duty-free shops at Indian airports.
In its proposal for Budget 2020-21, Association of Private Airport Operators (APAO) had said that sizable business at duty-free operations in South East Asia/Middle East region is through tourists that originate in India.
"Liquor allowance given in India is not at par with liquor allowance in neighbouring countries/Asia Pacific countries," APAO wrote to the government.
( With inputs from IANS )