Adani Suffers Setback as Court Rules Duty-Free Shops Must Follow Indian Law

In a major blow to the Adani Group, the Bombay High Court has declared that duty-free shops, including those at Mumbai International Airport, are fully subject to India's domestic laws and cannot claim immunity. This ruling, delivered late Tuesday, directly rejects Adani's argument that these airport retail spaces operate beyond India's territorial jurisdiction, especially concerning the sale of nicotine pouches. The court emphasized that while fiscal exemptions like customs duties apply, regulatory oversight remains firmly within national purview. The dispute began in April when Indian authorities objected to Mumbai Travel Retail Ltd., a venture backed by Adani, selling nicotine pouches, which are unapproved in India and classified as drugs under the Drugs and Cosmetics Act, 1940. The Centre had argued that these products posed a serious public health risk. This judgment sets a significant precedent for the entire duty-free retail sector in India, potentially reshaping compliance standards across the eight airports managed by the Adani Group, which is pursuing an ambitious $11 billion expansion. While the High Court didn't explicitly rule on whether nicotine pouches are indeed 'drugs', it directed Adani to formally present its case and supporting evidence to the Central Drugs Standard Control Organisation (CDSCO) within four weeks, with the regulator mandated to make a decision in 30 days. This means the final classification of these products, and thus their future at Indian duty-free outlets, still hangs in the balance, creating a critical watchpoint for both the Adani Group retail strategy and public health advocates.