India customs becomes second agency to fight Adani over nicotine pouches

NEW DELHI: India's customs authorities have joined the country's health ministry in its fight against the Adani Group over the sale of nicotine pouches at airports, arguing its duty-free shops only have tax advantages and are not immune from other regulations.

A March inspection by health officials of billionaire Gautam Adani's ‌Mumbai international airport ⁠found ⁠the sale of nicotine pouches at its duty-free shops was against the law - a decision that his company is now challenging at Mumbai's High Court.

Also Read: India seeks to quash Adani airport's nicotine pouch court challenge citing illegality, health risk


"The concept of goods being "outside customs frontiers" for taxation purposes does not grant immunity from regulatory controls," the customs department said in a filing submitted to Mumbai judges on June 22.

Adani has argued shops in the ⁠international departure ‌area are outside the reach of domestic regulations, and in a July 13 filing seen by Reuters argued its legal ⁠challenge was valid as customs had asked them to stop the sales without issuing any warning notice.

The group has also asserted that goods sold by duty-free shops to departing passengers are based on legal norms under which they are put in sealed bags and not supposed to be used until they reach outside India.

Also Read: Adani may be quietly building its next money-spinner

Customs authorities said that interpretation was "untenable" as passengers who take possession of ‌duty-free goods can then freely consume them. Adani and Indian authorities did not respond to Reuters queries.

Nicotine pouches - one of the world's fastest-growing nicotine products - ⁠have become popular in many countries but remain unapproved in India.

Philip Morris says its Zyn brand sales in the U.S. have surged, doubling last year compared with 2023.

Adani runs eight airports in India and is targeting an $11 billion expansion that includes a bet on duty-free offerings.

Since August, Adani's firm has imported Zyn and White Fox brands from Swedish Smokeless Solutions worth over $35,000, Reuters has reported.

The case will next be heard on July 28.