Duty-free shopping in the time of FTAs?

It's only natural for those of us packing our bags to go off on a foreign vacation this festive season to look forward to some heavy-duty duty-free shopping at the airports we pass through. But time was when duty-free shopping made sense. There were bragging rights in pulling out a 21-yr-old single malt before a group of untravelled friends and giving a detailed account of the visit to the distillery on the loch. Of course, you had to be smart and buy it on your way back from the airport duty-free, minus those pesky EU taxes. Try doing that now, and chances are someone in the group will tell you your bottled bit of happiness costs just about the same at the liquor shop around the corner. And, for good measure, somebody else will come up with a long-winded, phlegmatic account of the miserable weather around the loch.

Two big changes have taken place since duty-free shopping was the first brush Indians had with Western luxury. India now allows an extraordinarily wide range of imports at moderate duty. It just signed an FTA with Britain, which will, in due course, cover Scotch. And Indians are travelling abroad with a vengeance. Lots of them work and study abroad while keeping flying back to their families. The most recent surge is driven by tourism, as countries sweeten the welcome for Indians. These are a well-travelled bunch, smart enough to figure out that buying perfume, tobacco or liquor duty-free just cuts out the local taxes. Airport markups stay put.

It still makes sense to pick up something on arrival. This avoids the bother of carting stuff through multiple customs lines, where the rules may differ. You also need to be sure of what you want on arrival, as opposed to departure, where lounges are designed to unleash the impulsive shopper in all of us. Airport retail must rethink its business plan to make travellers linger in the arrival lounge with a bigger assortment of pick-me-ups. It should also push more exclusive stuff to a discerning customer base. Make that a bottle of Yves Saint Laurent Black Opium perfume.