As India prepares for the unveiling of the Union Budget 2024-25 later this month, the civil aviation sector is eagerly anticipating policy interventions that could alleviate operational challenges and reduce tax burdens. With the backdrop of recovery post-pandemic, stakeholdersfrom private airport operators to aircraft manufacturers are advocating for measures aimed at fostering growth and competitiveness.
Private airport operators, including prominent entities such as GMR-run Delhi International Airport Ltd and Adani-operated Mumbai International Airport Ltd, have articulated their priorities ahead of the Union Budget 2024-25. as per reports, these operators have underscored the urgent need for tax reforms and policy clarity to facilitate smoother operations and reduce financial burdens. A central concern highlighted in their proposal is the taxation structure surrounding the user development fee collected by airlines on behalf of airport operators. They argue that airlines, acting merely as intermediaries in this process, should not be required to deduct tax at source on these fees, a practice that currently ties up significant working capital crucial for infrastructure development and operational enhancements. Moreover, the private airport operators have called for an increase in the duty-free allowance for goods purchased from domestic duty-free shops, advocating to raise the current limit of ₹50,000 to ₹100,000. This adjustment, they argue, is necessary to align with inflation and enhance revenue streams at departure terminals. Additionally, they seek permission for duty-free shop operators to sell domestic Indian liquor tax-free at departure terminals, akin to export conditions. Such measures are anticipated to bolster airport revenues and provide relief amid ongoing economic challenges.In parallel, the aviation sector, particularly airlines, continues to grapple with the substantial cost burden imposed by aviation turbine fuel (ATF), which constitutes nearly 40% of total operational expenses for carriers in India—significantly higher than the global average of 20-25%. Despite a recent sequential reduction in ATF prices,the current rate of ₹94,969.01 per kilolitre in New Delhi remains markedly elevated compared to pre-pandemic levels around ₹64,000 per kl in 2019-20. Indian airlines have long advocated for the rationalization of ATF duties and its inclusion under the goods and services tax (GST) regime to enhance cost-efficiency and align with global standards.Furthermore, stakeholders in the aircraft manufacturing sector are optimistic about potential budgetary incentives to bolster domestic production capabilities. They emphasize the importance of a production-linked incentive scheme aimed at promoting high in-country value addition for aircraft components and sub-assemblies. Additionally, they seek tax breaks for aerospace research and development (R&D) initiatives and streamlined regulatory frameworks to facilitate innovation and technological advancement in the sector. These measures are seen as critical to enhancing India’s manufacturing competitiveness and supporting the growth aspirations of domestic airlines.Simultaneously, the nascent drone industry is advocating for policy reforms to establish India as a global hub for drone technology by 2030. Key demands include expansions in the production-linked incentive (PLI) scheme, dedicated R&D funds, common testing facilities for advanced drone systems, and a robust certification framework for Beyond Visual Line of Sight (BVLOS) operations. These initiatives aim to stimulate innovation, accelerate market adoption, and drive sectoral growth across diverse applications such as agriculture, infrastructure inspection, and public safety.In summary, as the government prepares to announce the Union Budget 2024-25, stakeholders across the civil aviation sector are united in their call for targeted policy interventions that address immediate challenges, foster sustainable growth, and position India as a global leader in aviation and drone technologies. The alignment of industry priorities underscores the importance of cohesive policy frameworks in navigating the complexities of post-pandemic recovery and advancing long-term sectoral resilience and competitiveness.
In conclusion, as Finance Minister Nirmala Sitharaman prepares to unveil the Union Budget 2024-25, the civil aviation sector’s expectations center on policy reforms that foster growth, ease regulatory burdens, and enhance competitiveness. The sector’s diverse stakeholders, from airport operators to aircraft manufacturers and drone innovators, are aligned in their call for strategic interventions that not only address immediate operational challenges but also pave the way for sustainable industry development in the years ahead.
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