Govt goes ahead to allow direct import of jet fuel by airlines

Government today moved forward to implement its decision to allow Indian carriers to directly import jet fuel, with the Civil Aviation Ministry writing to the Commerce Ministry to take the necessary steps.

The decision was taken earlier this month at a meeting of a Group of Ministers on aviation, headed by Finance Minister Pranab Mukherjee, that the Commerce Ministry would permit direct import of Aviation Turbine Fuel (ATF) "by or on behalf of Indian carriers directly as the actual user and on actual use basis," officials said here.

The cash-strapped Indian carriers, particularly Kingfisher, have been demanding allowing of direct imports due to the high incidence of taxation on ATF by state governments which led its price to be 30 to 40% higher in India than in countries like Singapore, Japan, and those in the Gulf and in Europe.

However, the officials said the Indian carriers would have to make their own tie-ups with the suppliers having infrastructure to import ATF directly for their use.

The sourcing of ATF through direct imports would lower the overall procurement cost for the airlines as sales tax varying from four to 30% in different states would be required to be paid only when local purchase was unavoidable, they said.