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"It has been a disappointing budget for aviation. There were expectations of relief in aviation turbine fuel and MRO taxes and funding support for regional airports. All dashed except for a minor correction in the duty-free period for import of spares and test equipment for MRO. Aviation sector would continue to struggle till fundamental policy changes on the taxation front are brought in,'' said Amber Dubey, partner and head-aviation at KPMG.
Last year then finance minister Pranab Mukherjee had offered waiver in custom duty for import of spares and testing equipment by MROs. However there was a rider - the duty waiver could be availed only if the spares were utilised in three months. Now that condition has been modified and duty waiver is applicable for a year.
"It only brings partial relief. The condition stipulating time limit of one year is impractical and should be done away with. However the positive thing is that MRO has got mention in union budget,'' said Ravi Menon, executive director of Air Works. The MRO owners have been demanding sops for the sector to make industry more competitive. Samir Kanabar, tax partner- infrastructure practice at Ernst & Young said the amendment in rules will encourage encourage foreign investment in MRO business but said that the government failed to address demands related to service tax and this could lead to prolonged litigation.
Air India will receive equity infusion of Rs 5,000 crore in the current fiscal, civil aviation ministry sources said. As a part of turnaround plan approved by government last year Air India will receive Rs 30,000 crore over period of eight years. In the first year Air India was expected to get Rs 10,600 crore in equity but now the airline is only expected to receive Rs 6,000 crore in the current fiscal. Air India has put its asset monetisation drive on fast track in the wake of anticipated delay in equity infusion by government.
