CII recommends rationalising sales tax, FDI, reviewing RDG in new aviation policy

The Confederation of Indian Industry (CII) has recommended that the new civil aviation policy should address key issues like the sales tax the states levy on jet fuel, route dispersal guidelines and investments by foreign airlines in domestic carriers. "A comprehensive policy direction is needed to address the prevailing crisis and lay a path for future growth," said Chandrajit Banerjee, Director General, CII, according to a report by The Times of India.

The development comes as the government is working on a new civil aviation policy which will promote investments and setting up of the required infrastructure for the sector. According to the industry lobby, the new policy should include a waiver of state sales tax on jet fuel which accounts for anywhere between three and thirty-three per cent. Addition of state sales tax increases the overall cost of jet fuel in India by 50 per cent more than anywhere in the world. The fuel price, which accounts for over 50 per cent of an airline's operating cost, has landed major carriers like Kingfisher Airlines, Jet Airways and SpiceJet in losses.