Govt panel for direct import of aviation turbine fuel by airlines

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Agencies: New Delhi, Feb 07 2012, 14:18 IST

In major initiatives to strengthen the cash-strapped aviation sector, a Group of Ministers on Tuesday decided to allow airlines to directly import jet fuel to enable them to save on high incidence of tax and permit Air India to raise Rs 7,400 crore by issuing bonds or other means.

The GoM, headed by Finance Minister Pranab Mukherjee, was also apprised of the decision to allow foreign airlines pick up 49 per cent stake in Indian carriers.

While the decisions on direct import of aviation turbine fuel (ATF) and allowing foreign airlines to invest would go to the Union Cabinet for a final nod, the Cabinet Committee on Economic Affairs would take up Air India's financial restructuring plan for approval soon, Civil Aviation Minister Ajit Singh said after the 90-minute meeting.

“First thing is that on Air India's financial restructuring, the GoM has taken a view. Bonds will be issued, but this will have to go to the Cabinet. Bonds, and there are other ways, GoM has more or less taken a view on this,” he said, adding that about Rs 7,400 crore would be raised through these means.

On ATF imports, Singh said airline “companies will be allowed to import fuel directly for their use. This also has to go to the Cabinet. GoM has approved this. We will try to see whether some kind of credit arrangement can be made”.

The meeting was also attended by Home Minister P Chidambaram, Petroleum Minister S Jaipal Reddy, Commerce Minister Anand Sharma and Planning Commission Deputy Chairman

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Import of ATF a retrograde step

C S Jacob | 07-Feb-2012Reply | Forward

Allowing airlines to import ATF, just to avoid payment of state sales tax at the usurious rates of 20-30 percent is a retrograde step. The country produces 8-9 million tonnes of ATF of which nearly half is exported. So to the extent the domestic airlines imports, that much more will have to be exported causing extra two-way ocean freight and handling charges. A way out should be found to release the ATF to domestic airlines at the landed cost of imports to save on these costs.