India has the third largest domestic aviation market in the world, next only to the United States and China. But the value added tax (VAT) on aviation turbine fuel, imposed by States, currently hovers anywhere between 4 and 30 per cent and has been a major reason for airlines’ losses and the cripplingly high operational costs of the airlines.
The high VAT rate was very much on Union Civil Aviation Minister Jyotiraditya M. Scindia’s mind when on November 18 he reiterated his call to the States and Union Territories to bring down the VAT on aviation fuel. While thanking those States and Union Territories that had already drastically reduced VAT on jet fuel to below 4 per cent, Scindia said these States had within a short period of a reduction in VAT gained by way of larger air traffic movement.
Addressing the ‘Civil Aviation Ministers Conference’ in New Delhi, Scindia said the civil aviation sector was probably the worst hit due to the COVID-19 pandemic. He called on the States and UTs to work collectively and provide “better passenger facilities and strive for the sector’s expansion and decentralisation”. The Minister assured the States and UTs of the Centre’s support and said “your success will lead to our success”.
Stating that the civil aviation sector had a large cost-benefit ratio and the potential to generate employment, the Minister called upon States and UTs to facilitate the construction of new airports by swiftly handling land allotment and acquisition issues. He said that the Ministry would be doubling the number of airports in India, taking the number to over 200 by 2023-24. The Minister also emphasised the plans on setting up at least one heliport in each district in collaboration with the States/UTs. On the issue of seaplanes, the Minister said that the States should provide capital support for this initiative.
On the issue of drones, Scindia said that it was Prime Minister Narendra Modi’s vision to create a leadership role for India in this sector. The Minister added that rules had been framed for promoting drones and production linked initiatives in the sector would provide a further push. Similarly, new initiatives, he said, had been taken up in the sectors of MRO (maintenance, repair and operations) , flying training organisations, last mile connectivity, cargo handling, and krishi udaan so that the bottlenecks were removed and the sector gained substantial growth and pre-eminence.
20/11/21 Ravi Sharma/Frontline
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