Providing a major thrust to the Indian airline industry, the Union Budget for 2012-13 proposed that the sector be allowed to raise capital through external borrowings worth one billion dollars for a year even as it recommended allocating Rs. 4,000 crore to the cash-strapped Air India.
In a bid to encourage maintenance, repair and overhaul (MRO) sector, this year’s budget proposed to allow full exemption from customs duty and countervailing duty to aircraft spares, tyres and testing equipment.
Presenting the budget proposals in Lok Sabha on Friday, Finance Minister Pranab Mukherjee acknowledged that the airline industry was facing a financial crisis. “The high operating cost of the sector is largely attributable to the cost of Aviation Turbine Fuel (ATF). To reduce the cost of ATF, Government has permitted direct import of ATF by Indian carriers, as actual users,” he said.
In a bid to address the immediate financing concerns of the civil aviation sector which is facing capital crunch, the Finance Minister proposed permitting “External Commercial Borrowings (ECBs) for working capital requirements of the airline industry for a period of one year, subject to a total ceiling of one billion dollars”.
16/03/12 Vinay Kumar/The Hindu
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