The Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee has cleared a proposal to allow Indian carriers to import fuel directly.
“The GoM has cleared the proposal to allow Indian carriers to import fuel directly and the final clearance will come from the Cabinet,” Union Civil Aviation Minister Ajit Singh said after the GoM meeting.
Importing fuel directly would help airlines save at least Rs 2,500 crore annually, a fourth of their total aviation turbine fuel (ATF) bill of Rs 10,000 crore.
Average tax on jet fuel in India is 24%, which is second highest in the world second only to Bangladesh at 27%. Fuel cost is around half an airline’s total operating cost is one of the reasons for losses incurred by them.
Allowing any airline to import oil directly will require the government to change the Foreign Trade Policy (FTP).
DGFT has the power to relax the norms, provided certain stringent conditions are met as laid out in the FTP, which categorically mentions there has to be a genuine damage in the event of which this relaxation can be given
The FTP of 2009-2014 stipulates that import of ATF will be allowed through a particular state trading enterprise, and in India, it is only the Indian Oil Corporation that can import jet fuel.
The aviation stocks were trading over 10% higher after the news. Jet Airways was 12.48% higher at RS 335.25, Kingfisher Airlines was up 16.31% at Rs 29.95 and SpiceJet 10.98% higher at Rs 27.30.
1 Due to logistical problems, this will be done only notionally by the airlines. In reality the OMC's will be quietly pressed in as the real enablers.
2 I hope this "bleeding" concern for the better-heeled will also be accompanied with atleast a cursory concern for the less well-heeled. To avoid a charge of blatant unfairness - let the petrol consumers be also allowed to import petrol-enabled by the OMC's! With this, paradoxically subsidies can be eliminated & yet the poor will get relief.
Why this Kolaveri D for other consumers, raise the price of air ticket and recover losses nobody told to reduce the ticket price and incure loss. It seems only way to legalise more outflow of money in pretest of fuel bill payments, indian consumers nor govt will gain anything
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The Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee has cleared a proposal to allow Indian carriers to import fuel directly.
