The Estimates Committee of the Parliament has recommended removing the cap in Foreign Direct Investment in the civil aviation sector. A report of the committee on the sector adopted in the last meeting noted that such a cap is limiting the growth of aviation sector in India. Though adopted in the panel, the report is yet to be tabled in Parliament.
The committee, in a detailed report on the “development and regulation of civil aviation”, said the benefits of opening up the passenger airlines sector for investment by foreign airline companies are manifold. “Apart from addressing the shortage of funds, this would help raise the level of services for consumers and promote healthy competition,” the report said, adding that FDI cannot be the “sole solution” to the Indian aviation sector’s debt problems. The report, prepared by the Estimates Committee headed by Francisco Sardinha, noted that national carrier Air India and many private airlines are running on loss, as per a report by AM Jigeesh in The Hindu Business Line. The committee was “dismayed” at the fact that the taxes on air fares are quite high and are adversely impacting competitiveness of Indian carriers vis-à-vis foreign carriers. The committee urged the Civil Aviation Ministry to take up the matter with the Finance Ministry on priority basis and work towards “simplification” of the tax regime. The committee noted that the aviation industry is “heavily burdened” with taxes and levies like sales tax on aviation turbine fuel, withholding tax on leased aircraft, high airport charges and levy of royalty, service tax on agency fees, expenses incurred abroad on loans raised and also services rendered and consumed abroad. The committee asked the Directorate General of Civil Aviation to revisit the procedures and regulatory mechanisms on safety thoroughly. Noting that 11 airports have been identified as critical airports, the committee urged DGCA to carry out surprise inspections at regular intervals to keep the system foolproof.
Click here to see the original article>The committee, in a detailed report on the “development and regulation of civil aviation”, said the benefits of opening up the passenger airlines sector for investment by foreign airline companies are manifold. “Apart from addressing the shortage of funds, this would help raise the level of services for consumers and promote healthy competition,” the report said, adding that FDI cannot be the “sole solution” to the Indian aviation sector’s debt problems. The report, prepared by the Estimates Committee headed by Francisco Sardinha, noted that national carrier Air India and many private airlines are running on loss, as per a report by AM Jigeesh in The Hindu Business Line. The committee was “dismayed” at the fact that the taxes on air fares are quite high and are adversely impacting competitiveness of Indian carriers vis-à-vis foreign carriers. The committee urged the Civil Aviation Ministry to take up the matter with the Finance Ministry on priority basis and work towards “simplification” of the tax regime. The committee noted that the aviation industry is “heavily burdened” with taxes and levies like sales tax on aviation turbine fuel, withholding tax on leased aircraft, high airport charges and levy of royalty, service tax on agency fees, expenses incurred abroad on loans raised and also services rendered and consumed abroad. The committee asked the Directorate General of Civil Aviation to revisit the procedures and regulatory mechanisms on safety thoroughly. Noting that 11 airports have been identified as critical airports, the committee urged DGCA to carry out surprise inspections at regular intervals to keep the system foolproof.