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States urged to slash VAT on aviation turbine fuel 

Predicting a 15 per cent compounded annual growth rate for the country’s civil aviation sector over the next 20 years, Union Civil Aviation Secretary RN Choubey on Thursday called upon States to bring down VAT on aviation turbine fuel.

“Bringing down VAT on fuel will further accelerate the growth of the country’s aviation sector. We have represented to the GST council and are hopeful that the aviation turbine fuel would be brought under its fold,” Choubey said.

Already some States have brought this down to 1 per cent. This is an added attraction for airliners to look at these States, he said.

Delivering his keynote address at the Wings India 2018 aviation show Choubey said, “The country’s aviation sector growth will be fuelled by the middle class which accounts for a third of the 1.25 billion population. If this large segment too takes to flying, it would trigger faster growth.”

Both Civil Aviation Minister Ashok Gajapati Raju and Minister for State for Civil Aviation Jayant Sinha could not attend the show, which got underway on Thursday.

Referring to the Udan scheme, which he said was a game changer in the country, Choubey said it would require huge infrastructure boost. “We as a country developed 67 airports in the last 70 years, that is about one airport per year, but we hope to almost double this number within three years.”

“Over the next 18 months we expect to add about 58 airports, which will further boost the growth of the aviation sector. A concerted effort is now under way to expand the existing airports, set up new greenfield ones and strengthen and upgrade the infrastructure for regional connectivity,” he said.

Apart from the private sector, the Airports Authority of India will play a major role in expansion of airport capacity. Towards facilitating the expansion of airports capacity several Acts, including the AAI Act and the Airports Economic Regulatory Authority of India Act, would be amended, he said.

Challenges in expansion

Referring to challenges in expansion of airports, he said the existing airports and ones that would come up will have the flexibility to raise funds by monetising land assets. Through the concept of land pooling, apart from development of the airport, townships would be created so that it would encourage people to share their land for airport development, he said.

While India currently has about 395 aircraft operating, the order book of more than 900 aircraft would be a major boost to the growth of the sector, he said.

Positive response

Responding to Choubey's observation on bringing down VAT on aviation fuel, KT Rama Rao, Telangana Minister for Industries, said the State would positively look at slashing the tax.

Rao called upon the Centre and other aviation players to look at investing in the State, which is already emerging as a hub for aviation and aerospace industries.



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