- The Bombay High Court ruled Indian law applies to goods in airport duty-free shops located within India.
- The ruling rejects Adani’s argument that the customs barrier places its shops beyond domestic regulation.
- Drug regulators will decide whether nicotine pouches qualify as drugs; the court left that issue open.
The Bombay High Court ruled that goods brought into duty-free shops within Indian territory remain subject to India’s regulatory regime, rejecting Adani’s argument that its outlets fall beyond domestic law. The order came late Tuesday, September 22, 2026.
The case involves nicotine pouches sold at Adani-operated airport duty-free shops. Adani argued that shops in international departure areas sit beyond the customs barrier and outside India’s regulatory reach.
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The court did not resolve whether the products legally qualify as drugs. That question remains for Indian drug regulators.
The decision is a setback for Adani’s airport retail business. It addresses the reach of Indian regulation over goods in the shops, not the final classification of the products.
The court tied its ruling to the shops’ location inside India
The court said the goods remain subject to Indian law even when a transaction takes place in a duty-free shop beyond the customs barrier. It connected that conclusion to the shops’ location within Indian territorial jurisdiction.
“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 domestic regulatory regime will apply in full force to such goods brought into the DFS within the Indian territorial jurisdiction.”
The holding rejects the argument that the customs-barrier position alone removes goods from domestic regulation. The court’s focus was the regulatory regime applying to goods brought into shops on Indian territory.
Duty-free status does not necessarily remove other controls
Duty-free treatment concerns fiscal levies, including customs duties. It does not necessarily exempt goods from rules governing their sale, classification or public health controls.
That distinction frames the scope of the order. The ruling concerns the applicability of regulation in the duty-free setting; it does not decide the substantive classification question raised by the products.
The case therefore separates the location-based argument from the underlying product dispute. Adani’s position relied on the outlets’ placement beyond the customs barrier, while the court held that the goods remained within India’s regulatory regime because the shops were in Indian territory.
Drug regulators will decide the pouches’ classification
The dispute followed Indian authorities’ allegation that shops at Mumbai airport illegally stocked and sold the products. New Delhi treats them as illegal and regards them as drugs.
The court left the underlying drug-classification issue open at this stage. Its order permits Adani to make representations before Indian drug regulators, who will decide the issue on the merits.
That review will determine the classification question that the court did not settle. The regulators’ decision, rather than the shops’ duty-free designation, is the next step in the dispute.
