Travel retailer Flemingo International says the Indian duty free and travel retail market lost $50m in a three-month period due to Indian regulatory changes on labelling last year. However, at the weekend, the Asia Pacific Travel Retail Association expressed hopes that the issue might subside thanks to new January guidelines.

As TRBusiness exclusively reported in January, the Indian DF&TR confectionery category was under severe pressure last year due to the implementation of strict rules from the Food Safety & Standards Authority of India (FSSAI) related to the declaration of ingredients and their labelling.

Several brands have had to withdraw products from the market as a result. According to operator, Delhi Duty Free Services, M&Ms were non-compliant, Lindt only had certain skus that were available for travel retail, and Cadbury was partly compliant, but not the complete range.

The effect has been a dramatic fall in sales for many Indian operators. Paul Topping, Director of Flemingo [whose locations include Mumbai International and Chennai] said at ACI’s recent Airport Economics & Finance Conference in London: “In India because they changed the legislation overnight about labelling we lost $50m in something like three months in duty free.”

NEW RULES, NEW HOPE

However, the FSSAI issued new guidelines for the importing of food and beverage products into India in January which Aptra believes are a “potential breakthrough” and will give hope to the industry.

“These amended rules clearly state that goods intended for export and not domestic consumption will be exempt,” it says. “According to one legal counsel it appears that this is a positive evolution for duty free retailers as it means that goods brought into the country for sale in duty free shops are concerned (sic) by the exemption from FSSAI testing and labelling.”

Effectively, the change in wording suggests that goods that will be leaving the country will probably be given an exemption; however arrivals sales may continue to be treated in the same way as they are now as they are not being exported.

Aptra adds: “While the move seems positive for the industry as it recognises the fact that duty free is a different retail channel from the domestic market, industry stakeholders in India are still deliberating over the exact implications for departures and arrivals. It is not 100% clear yet whether this signifies a total reprieve for the industry.”

The association – which has just launched a new version of its website in Mandarin – adds: “One thing is certain however; it illustrates the need to constantly make the point that there is a clear difference between retail in the domestic market and the retail business in our industry. Only by continuing to make this point do we have a chance of ensuring we are not included within local legislation where our specific needs and circumstances are not taken into account.”