New Delhi: To help the financially-pressed aviation sector, the government may allow airlines to import their fuel directly. The move 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.
Since a decision on allowing airlines to import ATF involves a policy change, any decision on this will have to be referred to the Cabinet for approval.
A consensus on this issue emerged in a meeting held a few days earlier by a group of secretaries of relevant ministries, formed to look at the issues of concern for the sector. It included representatives from the ministries of civil aviation, commerce, petroleum and finance, beside the directorate-general of foreign trade (DGFT).
“It was felt that the airlines should be allowed to import fuel directly, as that will lead to huge savings for them. Our ministry has supported this demand and the good news for the airline may come very soon, maybe in two weeks,” said a senior civil aviation ministry official, who did not want to be identified.
Currently airlines buy ATF from oil companies. It is imported on their behalf. That is why they have to pay hefty states sales tax. By importing directly for their own consumption, the airlines would not have to pay the levy. The average sales tax on ATF in India is the second highest in the world, lower than only Bangladesh’s 27 per cent. The average tax in India is 24 per cent.
23/12/11 Mihir Mishra/Business Standard
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