Centre urges states to reduce tax on jet fuel

Civil Aviation Minister Jyotiraditya Scindia on Tuesday said there is a huge demand for air travel after the pandemic and urged eight states and Union Territories to reduce the tax on jet fuel.

Air traffic growth will be driven by smaller cities, he said and emphasised the need for developing airport infrastructure in such places.

The minister was speaking at the Civil Aviation Ministers' conference in the national capital.

The domestic air traffic is inching closer to pre-COVID level and in recent times, the daily passenger numbers crossed the four lakh mark twice.

Scindia said that Value Added Tax (VAT) on jet fuel is still high in eight states and Union Territories in the range of 20-30 per cent and urged them to reduce the rate.

Jet fuel cost accounts for a significant part of an airline's operational costs.

The minister requested Goa, Assam, Delhi, Maharashtra, West Bengal, Rajasthan, Bihar and Tamil Nadu to reduce the VAT on Aviation Turbine Fuel (ATF).

"New growth to come from Tier 2 and 3 cities," he said and emphasised the need to bring down entry barriers in the context of high VAT on jet fuel in some states.

Currently, 28 states and Union Territories have VAT on jet fuel in the range of 1-4 per cent, he added.

He described the country's civil aviation sector as a "towering phoenix" and operating seamlessly in a high demand environment compared to issues faced by travellers and airports in different parts of the world.

While stressing that civil aviation must be for the common man and not just for the chosen few, Scindia said last-mile connectivity is important.

He also pitched for development of airport infrastructure in smaller cities which will be the new growth area in the days to come.

Currently, there are 141 operational airports, including heliports and waterdromes.

About the sector, the minister said 15 more Flying Training Organisations (FTOs) will be set up. Currently, there are close to 34 FTOs.

European company Safran will invest around USD 150 million to set up a facility in India for servicing aircraft engines, he added.

The country's civil aviation sector is on the recovery path after being impacted by the pandemic.

"We have been through very very difficult times," Scindia said.

At the conference, Union Minister of State for Civil Aviation Gen (Retd) V K Singh said there should be helipads in every district.

On October 9, the domestic air passenger traffic touched 4 lakh and was inching closer to the pre-COVID level.

Prime Minister Narendra Modi, on October 11, described the number of daily domestic air passengers nearing the pre-COVID level as a "great sign" and said the focus is on improving connectivity across the country.

In August, Indian airlines carried a total of 1.01 crore passengers, which was 4 per cent higher than the traffic registered in July, as per official data.