GoM to decide today on free import of ATF

New Delhi: A group of ministers looking into the pricing structure of jet fuel is expected to take up a proposal on Monday for freeing up imports of the commodity, a move that could spell relief for loss-laden airlines.
The finance ministry seems in favour of the proposal, a government official privy to the development told ET. If accepted, the recommendation could provide respite to airline companies, as aviation turbine fuel (ATF) constitutes 40-45% of the operating cost of an airline.
A proposal to allow import of ATF under open general licence (OGL) was mooted by the civil aviation ministry, after the country’s airline industry suffered an estimated loss of Rs 10,000 crore in 2008-09.
Today, only Indian Oil Corp (IOC), the designated agency, can import ATF. Once jet fuel is moved to the OGL category, the most liberalised import licence, any licence holder will be able to import it without an export obligation.
If the airlines start importing ATF directly, they will be able to avoid high sales tax levied by states at 12-34% on the commodity, which will add to their savings. ATF imports also face a 7.5% countervailing duty (CVD) in lieu of excise duty, which is levied on domestic production, but enjoy nil customs duty.
12/10/09 Deepshikha Sikarwar/Economic Times

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Categories: Indian Aviation- In General Oct 2009