Civil aviation ministry?s measure to allow domestic carriers to import jet fuel directly has found no takers in the industry. The carriers are, instead, asking the ministry to bring aviation turbine fuel (ATF) under ?declared goods? category.
In a recent meeting, the airlines have told senior aviation ministry officials that they can not import ATF directly due to unavailability of infrastructure and setting up their own infrastructure would incur huge cost. ?They (airlines) have made it clear that the notification in this regard (allowing direct import of ATF) would not be of any help and want ATF to be put under declared goods category,? said a ministry official.
Interestingly, the commerce ministry had last month notified direct import of ATF by airlines only after the companies made a strong pitch for it to prevent shooting up of ATF prices in wake of higher local levies. As per the changes, airlines are allowed to apply to Directorate General of Foreign Trade (DGFT) for a licence to import ATF.
However, as of now, no airline seems to be thinking of that. Instead, they feel, once the ATF comes under ?declared goods? category, it will attract a uniform 5% levy across the states and that would be of greater relief than importing fuel directly.
?We can not do it alone. The infrastructure is with oil companies. There is no clarity whether the state government will start levying some charges afterward. We can not put in money in setting up infrastructure based on so many uncertainties,? an IndiGo official, who did not want to be named, said.
The ATF prices have gone up over 17% in the last one year. In Delhi, the ATF prices have moved up from R54,933.36 on March 1, 2011, to R64,596.36 per kl on March 1, 2012. The sales tax on ATF varies from 4% to 30% in different states. The decision has not gone well with the states as well.
Direct import of jet fuel is likely to cost around R2,500 crore to the states across the country who have been levying sales tax on ATF. Bihar?s deputy chief minister Sushil Kumar Modi, who also heads the panel of state finance minister, had pointed out that the move will impact the revenues of states.