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March 23, 2018
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States urged to cut VAT on aviation turbine fuelUnion Ministry wants ATF brought under GST regime

Wings India 2018 took off on Thursday with a top official of the Union Civil Aviation Ministry highlighting how the sector could get a big boost with States reducing value-added tax on aviation turbine fuel and Telangana responding positively to the suggestion.

“The VAT is among the highest in the world… actually hampers growth of the sector. The total amount collected by States [from the levy] is about ₹3,000-4,000 crore in a year,” Secretary to the Ministry R.N. Choubey said.

At another level, the Ministry is also working with the GST Council to push the idea of bringing ATF under the Goods and Services Tax regime, he told the four-day event that got under way amid the political heat generated by the TDP decision to pull out both its representatives from the Union Cabinet, including Civil Aviation Minister P. Ashok Gajapati Raju. Telangana Industries and IT Minister K.T. Rama Rao, who inaugurated the event in the absence of Mr. Raju, said the official’s point about ATF was valid. “For sure [we will] take it up in our State and ensure… come out with [a] positive recommendation,” he added. He said this while urging the Secretary to consider establishing a centre of National Aviation University at the Begumpet airport. With Hyderabad emerging as a key Regional Connectivity Scheme (RCS) hub – the international airport operated by GMR handling 18 million passengers and 135 tonnes of cargo every year – the State was keen on major airlines using the city as a preferred hub for wide-bodied, long haul aircraft serving international routes. It wanted to play host to the MRO centres, staff training centres and technology development centres of more airlines. Telangana wanted to make Warangal airport functional to give boost to the mega textile park and IT hub launched there, he said. Later, during media interaction, Mr. Choubey stressed the need for skill development towards ensuring a pipeline of talent to meet the manpower demand. As many as 8,000 to 10,000 pilots alone are needed in the next 5-6 years.

“We would need that many more engineering, cabin crew, supporting staff.”. The demand is bound to surge as airlines are set to grow their fleet from over 300 now to around 1,000 in the next few years. A total of 56 airports and 31 heliports are set to be upgraded as part of the Centre’s RCS.

Senior Vice President of FICCI Sandip Somany said India’s aviation market was likely to surpass that of the U.S. and China by crossing 1 billion passengers per year in the next 10-15 years.