Key Takeaways:
The Indian government is seeking to dismiss Adani Group's court challenge over nicotine pouch sales at Mumbai airport, arguing the products violate drug laws carrying a minimum three-year prison term.
The Indian government told a Mumbai court that Adani Group's sale of nicotine pouches at the city's international airport constitutes a "substantive violation" of drug laws carrying a minimum three-year prison term, seeking to dismiss the conglomerate's legal challenge.
"The products enter Indian airspace and Indian territory at the moment of arrival at CSMIA," the Central Drugs Standard Control Organisation said in a July 7 court filing reviewed by Reuters. "The fact that they are stored in a customs-bonded warehouse does not mean they are not physically present in India."
Adani's Mumbai Travel Retail, a joint venture with Dubai's Flemingo, imported about $37,000 worth of nicotine pouches including Philip Morris International Inc.'s Zyn and Swedish Smokeless Solutions' White Fox since August last year, customs records show. A government study in June called the pouches "a new and largely unregulated public health concern," with illegal sales widespread among Indians aged 18 to 40. Tobacco kills 1.35 million people annually in the country.
The case, set for hearing Tuesday in the Mumbai High Court, could set a precedent for how India regulates one of the world's fastest-growing nicotine products at duty-free airport shops. Adani, which manages eight airports and has an $11 billion expansion plan targeting duty-free offerings, argues Indian law does not apply to goods stored in customs-bonded warehouses and sold only to departing international passengers.
The dispute stems from a March inspection by India's drug department, which found that Adani's duty-free shops at Mumbai's Chhatrapati Shivaji Maharaj International Airport were stocking and selling nicotine pouches without required approvals under the Drugs and Cosmetics Act. The government argues the pouches fall under the legal definition of a drug, requiring a valid registration certificate and import license.
India banned e-cigarettes in 2019 and has approved only certain nicotine replacement therapies such as patches and chewing gums through a formal registration process. Nicotine pouches, which users place under the lip to deliver a nicotine dose, remain unapproved and illegal under current regulations, the government said.
Adani has countered that nicotine pouches are "not a drug" and represent a "recent innovation" not anticipated by existing tobacco control laws. The company also argued that its duty-free shops operate "beyond the customs frontiers of India" and outside domestic regulatory reach. In June, Mumbai High Court judges ordered "no coercive action" on existing stock, scheduling the current hearing.
The legal battle carries financial consequences beyond the immediate case. Selling a drug without a license carries a minimum three-year prison term and a fine of at least 100,000 rupees ($1,049), or three times the value of the drugs confiscated, whichever is higher. Flemingo Dutyfree, which operates shops at international seaports including Mumbai, has told the court it fears similar enforcement actions as it was "in the process of stocking" nicotine pouches.
The government's stance mirrors its 2019 prohibition on e-cigarettes, which it banned entirely citing public health risks. That ban set a regulatory precedent that the government now argues should apply to nicotine pouches, which have seen rapid global growth — Zyn's US sales doubled in 2025 from 2023, according to Philip Morris.
This article is for informational purposes only and does not constitute investment advice.
