The government has taken various measures, including persuading states to reduce VAT on jet fuel and allowing Indian carriers to import fuel at cheaper rates, to revive the struggling civil aviation sector, Rajya Sabha was informed today.
In a written reply to a question on revival of aviation sector, Minister of State for Civil Aviation Mahesh Sharma said the government has "persuaded state governments to reduce Value Added Tax (VAT) on aviation turbine fuel" and also "allowed direct import of ATF by Indian carriers as actual users."
However, the government, in the budget yesterday, proposed to increase the excise duty to 14 per cent from the current 8 per cent on jet fuel, which accounts for over 40 per cent of a carrier's operating expenses.
Highlighting other steps taken by the government to provide cushion to the ailing aviation sector, Sharma said the Centre has "permitted foreign airlines to participate up to 49 per cent in the equity of scheduled air transport undertaking".
He said the government has also "allowed External Commercial Borrowings (ECB) for working capital requirement of airline industry for a period of one year subject to a total ceiling of 1 billion dollars."
Besides, he said, the Centre has given tax concessions for parts of aircraft and testing equipment for third party maintenance, repair and overhaul of civil aircraft.
