Lowering of sales tax on jet fuel required: Assocham

December 29th, 2011 - 4:56 pm ICT by IANS  

New Delhi, Dec 29 (IANS) Lowering of sales tax on jet fuel, upgradation of airport infrastructure and allowing foreign capital by international airlines in domestic carriers are required for the civil aviation industry in India, said a major industry lobby Thursday.

“The right vision, road map, policies and a relentless focus on quality and cost would set (India) to claim its rightful place in global civil aviation industry,” Associated Chambers of Commerce and Industry of India (Assocham) secretary general D.S. Rawat said in the lobby’s proposals for the ailing sector.

The industry lobby has proposed a eight-point strategy for the financially-strapped sector which is suffering a debt burden of around Rs.1 lakh crore, accumulated during 2000-2010, and losses of Rs.20,000 crore in the past three years.

The industry, which recorded a 17 percent growth in passenger traffic by catering to 55 million domestic passengers between January and November against 46.8 million in the like period of last year, is struggling due to rising tax on jet fuel and interest costs which are eating into the margins of carriers.

Sales taxes on jet fuel imposed by the state governments range from 3 to 35 percent which makes it 50 percent higher than anywhere else in the world.

These factors were cited by airlines such as Kingfisher, Jet and Spicejet for being in the red.

The eight-point strategy calls for opening foreign direct investment (FDI) by international airlines to bring in capital and technological expertise and allowing easier access to global routes by Indian carriers for increasing their yields

“Allowing FDI by foreign airlines and allowing more Indian carriers to fly overseas by utilising full quota of bilateral agreements could be key enabler to fuel further growth.”

“At the same time, the government must rationalise ATF (aviation turbine fuel) prices in tune with international benchmarks through policy changes.”

The proposals also includes creating an infrastructure development fund to build airports in tier II and III cities.

Assocham also called for introducing fiscal incentives and innovative funding solutions to overcome constraints which are being faced by airport operators.

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