The Minister of Civil Aviation P Ashok Gajapathi Raju expressed that the Budget 2016-17 has paved the way for developing India as a maintenance, repair and overhauling (MRO) hub of Asia. He said that the budget has made provisions for incentivising domestic value addition to help Make in India.
Provisions for the MRO business in India
The tools and tool-kits used by the MRO have been exempted from customs and excise duty; the exemption shall be given on the basis of documents certified by the Directorate General of Civil Aviation (DGCA). Procedure for availment of exemption from customs and excise duty has been simplified, based on records and subject to actual user condition.
Restriction of one year for utilisation of duty free parts has been removed. The notification on Standard Exchange Scheme has been revised to allow import of unserviceable parts by MROs for providing exchange/advance exchange.
Foreign aircraft brought to India for MRO work will be allowed to stay up to six months or as extended by the DGCA. The aircraft can carry passengers in the flights at the beginning and end of the stay period in India.
“The MRO business of Indian carriers is around `5000 crore, 90 per cent of which is currently spent outside India – in Sri Lanka, Singapore, Malaysia, UAE etc. Given the technology and skill base, the government is keen to develop India as an MRO hub in Asia, attracting business from foreign airlines while retaining the domestic business. The above budget provisions will go a long way in realising this aim,” Raju said.
Unserved and under-served airports
The minister also welcomed the budget provisions aimed at reviving the unserved and under-served airports in the country for increasing regional connectivity. The Budget 2016 provides that the central government will partner with the state governments to develop some of these airports and airstrips in the country. He shared the following action plan for revival of such airports
Airports/airstrips under control of state governments will be identified for development in consultation with state governments and airlines to make such airports operational. Commitment will be sought from the state governments on tax exemptions, reimbursement of expenditure of the recurring operational cost by providing free electricity, water and security to the airport. The entire airport project will have tax exemption from all municipal/property tax, whereas VAT on ATF will be brought down.
Revival of AAI owned non-operational airports:
In the financial year 2015-16, Airports Authority of India (AAI) proposed to revive 10 non-operational airports. These airports are initially unviable and would require budgetary support from the government.
Skill development
Speaking on the likely impact of budget on skill development, the minister said that Service Tax exemption under Deen Dayal Upadhyay Grameen Kaushalya Yojana will enable training providers to set up training institutes across the country. Exemptions for assessing bodies empanelled centrally by Directorate General of Training will also promote setting up of training institutes, attracting youth towards the civil aviation sector.
Excise duty on ATF
About the increase of excise duty on air turbine fuel from eight per cent to 14 per cent, Raju said that the decrease in ATF base price over the last 13 months is around 25.04 per cent. The increase in ATF prices due to increase in excise duty comes to around 6.56 per cent.
The Minister of State for Civil Aviation and Culture and Tourism, Dr Mahesh Sharma also welcomed the provisions made for the civil aviation sector in the Budget 2016 and said it would give a major boost to the aviation sector in the country and make flying easy for the common man.
