‘Need to bring aviation turbine fuel under GST’

Sushant Ranjan
Thursday, 31 January 2019

Dhairyashil Vandekar said, “In the coming budget, I expect  support to strengthen the UDAN scheme, which has energised the regional connectivity in India. For this, schemes and policies with focus on infrastructure development with private sector investment is expected for speedy development, maintenance and operation of airports and water bodies, especially in Tier 2 and Tier 3 cities to facilitate the RCS scheme and promote tourism.”

PUNE: India continues to be one of the fastest growing aviation markets in the world. The domestic air passenger traffic increased to 1.39 billion in 2018, a growth of 18.6 per cent over 2017. Aiming to achieve 1 billion trips in 15 years, India is set to add 1,000 aircraft and make operative 100 more airports in next 7 to 8 years. 

As per the International Air Transportation Association, India is set to become the third largest aviation market in the world by 2024 after China and the USA. To complement this robust growth, the government has taken constructive steps. Launch of the Regional Connectivity Scheme (UDAN), action to revive the unused 400-plus airports and airstrips, liberalising Foreign Direct Investment (FDI) in aviation sector, formulating National Civil Aviation Policy, developing new airports, augmenting capacity of existing ones, taking up operations of existing ones under the PPP model and satellite-based navigation system are some of the NextGen initiatives taken by the government.

Dhairyashil Vandekar, aviation expert and analyst, said, “In the coming budget, I expect  support to strengthen the UDAN scheme, which has energised the regional connectivity in India. For this, schemes and policies with focus on infrastructure development with private sector investment is expected for speedy development, maintenance and operation of airports and water bodies, especially in Tier 2 and Tier 3 cities to facilitate the RCS scheme and promote tourism.”

“In India, many airlines are in financial crisis due to the cut-throat fare wars, rise in crude oil prices and fall in rupee, which has resulted in higher lease rentals. In the coming budget, they are looking up to the government for tax relief to reduce their high cost of operations and debt burden. The airlines demanded rationalising of ATF prices to international benchmarks. There is a need for aviation turbine fuel (ATF), which attracts both Central Excise duty and State VAT, to be brought under the GST regime,” he said

There is a massive potential for MRO sector in India, which spent up to USD 950 million on aircraft maintenance in FY2017. Notably, out of this, only USD 95 million worth of work was done from Indian MROs. The government needs to urgently provide the impetus and tax relief to this industry to make it viable. 

The MRO industry in India is worth about USD 1.5 billion and has potential to be an important player in boosting the economy and creating lakhs of jobs.

“Seaplanes have a great future in tourism and emergency medical care. Pragmatic policies to attract private sector investments in seaplanes and infrastructure for their operations are required as not much has happened for their procurement since the announcement by FM in the last budget,” Vandekar said.

“In view of the quantum increase in aircraft and helicopter traffic, there is a need to invest, develop and modernise the air navigation, surveillance and landing facilities in our country to the NextGen level and ensure safe air space management. Also, as announced in the last budget, agri exports need to be supported by creating infrastructure such as warehouses for agriculture exports at all potential airports,” he said.

Related News