Court rejects Adani plea that duty-free shops are beyond domestic laws

Fresh updates from the financial markets indicate that An Indian court has ruled that goods sold at duty-free shops are not immune from domestic laws, dealing a blow to the Adani Group's airport sales of nicotine pouches, which New Delhi calls illegal and regards as drugs.

In a case widely noted as setting a precedent on duty-free sales, Adani in April challenged Indian authorities who stated its Mumbai international airport shops illegally stocked and sold nicotine pouches, one of the world's fastest-growing ​nicotine products, which stay ​unapproved in ⁠India.

Billionaire Gautam Adani's group manages eight airports in India and has an ambitious $11 billion expansion plan, including for duty-free shops, to capitalise on the growing demand for air ​travel.

While Indian authorities told the court that stocking nicotine pouches was a "substantive violation" of drug laws and a "serious public health risk", Adani denied any wrongdoing.

Adani argued in court that shops in international departure areas are outside the reach of domestic regulations as they sit beyond India's territorial jurisdiction.

The High Court in Mumbai disagreed in an order issued late Tuesday.

"Such goods would be subject to the law of the land and would be governed by the regulatory regime in force even if the transaction takes place in the DFS (duty free shops), beyond the customs barrier," the order stated.

"The domestic regulatory regime will apply in full force to such goods brought into the DFS within the Indian territorial jurisdiction," it further noted.

Adani Group did not immediately respond to Reuters requests for comment.

In its court submissions, Adani additionally argued that nicotine pouches are "not a drug" and a "recent innovation", and attract no scrutiny under Indian laws – a position New Delhi disagreed with.

The court stated it could not answer that question at this stage and instead stated Adani was free to make representations before Indian drug regulators, with supporting material, and the regulator can decide that on its merits.