Press Release

23 states have slashed VAT on jet fuel, working with others to lower tax:, Civil Aviation Minister

New Delhi, 28th February 2022: Civil Aviation Minister Mr Jyotiraditya Scindia assured the industry that he would not rest until the burden of higher jet fuel becomes lower even as most of the states have already reduced the Value-Added Rates significantly in pursuance from the Centre. 

Addressing an ASSOCHAM 13th International Conference cum Awards on ‘Civil aviation and cargo- Driving post-covid Growth’ meeting, Mr Scindia said he is of a firm conviction that the role of the government should be to move away from being a regulator to a facilitator. He said the issue of high rates of VAT rates is being addressed in close cooperation with the state governments with his consistent pursuance with the respective chief ministers. 

As a positive outcome, as many as 23 states have slashed their VAT on aviation turbine fuel (ATF) from 15-30 per cent to 1-4 per cent in the last six and half months. 

“Task is not yet complete.... I commit to you that I would not rest until we make that burden of the high level of VAT lower, Mr Scindia said. 
 
Thanking the Chief Ministers of the states which have cut the VAT on jet fuel, the Civil Aviation Minister said the leadership of these states played a progressive stand. These included Gujarat, Uttar Pradesh, Karnataka, Haryana, Uttarakhand and Madhya Pradesh among others including several UTs.  

Mr Scindia said he has raised ''multiple '' issues faced by the civil aviation industry with the Finance Ministry which is examining the same. ''I am confident that we will be able to achieve solutions as we go along''.  

On the issue of flexible use of air space policy, the minister said it goes to the sole credit of the Prime Minister Shri Narendra Modi that of the 120 routes which were focussed upon with the Indian Air Force where that air space was to be handed over to the civil side, 118 have already been notified. This means a flight from Chennai to Srinagar saves 15 to 20 minutes in terms of travel times.    

He said the government has already taken various policy measures like scrapping of royalty to enable India to leverage the global MRO (Maintenance,Repair, Overhauling) industry , with a size of USD 2 billion. India's share in the MRO enterprise is only 15 per cent, " there is no reason why India cannot become a hub for MROs".   

The Minister said he has set up 9 advisory groups which work in a target-oriented manner with the government, including himself, to achieve various targets in different sub-sectors. He listed Flying Training organisations as another area of growth potential, as the Indian airlines are spending precious foreign exchange for training our pilotes overseas.     

Sharing his optimism, Mr Scindia said the Indian aviation sector has moved well in the upper half of the 'S' curve, marking a phase of sharp growth. In the next ten to 15 years, the size of the aircraft fleet is expected to more than double from the present level 720.   

Mr. Ajay Singh, Vice President, ASSOCHAM & Chairman & Managing Director, SpiceJet Limited; gave his welcome address and outlined how the industry has achieved a lot even in pandemic and connected small towns and cities in the air space. Air services played a significant role in carrying goods from one place to another during covid19 phase.  Airlines have played a stellar role in getting our Indian citizens back from the affected areas in the world. He applauded the efforts of Civil Union Minister who made dents in prices of fuel and tax reduction in 12 states of the country.  

Mr. K. Narayana Rao Chairman, ASSOCHAM National Council on Civil Aviation & Jt MD GMR Group said, In the world, the civil aviation industry of India is at 8th position and in next 5 years we are targeting to reach at 3rd position globally. Specially, cargo has lots of opportunities untapped to achieve bigger growth in the global market. He further added that 'Civil aviation industry has immense scope because of high GDP'. It not only facilitates tourism, trade and commerce but also enables economic development of states and India as a whole. 

 Others who also spoke during the conference were Mr. Salil Gupte President Boeing India, Mr. Laurie Alder, Airbus India and Ms. Ashmita Sethi, Country Head Pratt and Whitney.