Experts have asked the government to notify aviation turbine fuel as a declared good and lay a clear road map for sale of Air India among other measures to be considered in the forthcoming Union budget.
“The notification on declared good should be with immediate effect. It is much more prudent to generate tax from downstream goods and services than an industrial raw material (ATF). ATF in India is 55-60 per cent costlier than the Gulf and ASEAN region. The cascading effects of ATF taxes have brought ruin to the airline sector. ATF should have a uniform levy of 4 per cent across India,” said Amber Dubey, partner and India head of Aerospace and Defence, KPMG.
“The government should announce a clear road map for auction of Air India to the private sector. Else Air India will continue to bleed under increasing competition, falling market share and increasing costs. Low fare offers by the taxpayer-funded- airline distorts the market. The taxpayers’ funds should be used for development of the entire aviation sector and not just one player,” Mr. Dubey added.
Though the government has decided to develop new airports in Tier-I and Tier-II cities, there are still significant challenges relating to land acquisition, various regulatory approvals and finalization of airport tariffs.
“I expect these challenges to be addressed in the forthcoming budget,” said Ankur Bhatia, Executive Director, Bird Group.
“There is an immense potential for growth of the Indian civil aviation industry provided certain structural deficiencies are corrected. It would serve as a key enabler for economic growth, employment creation and tax revenues. It is imperative that success of civil aviation is seen as a national priority,” he added.
The other recommendations include establishment of an independent Aeronautics Commission with a budget of around Rs.500 crore to facilitate cutting edge research and development of aeronautical manufacturing in India; a ten-year tax holiday on aeronautical and defence manufacturing; MRO and import of aircraft, allowing private airport operators to issue tax-free infrastructure bonds to the public and provision for seed funding for development of LCC terminals at major airports.