Taxes and Poor Infrastructure Biggest Obstacles of Aviation Growth in India: FICCI

A recent survey conducted by EY and FICCI on the aviation sector depicted that there was a need of proper implementation of policies for the aviation sector.

Created On: Sep 10, 2013 10:45 IST

A recent survey conducted by the global consultancy EY and the Federation of Indian Chambers of Commerce and Industry (FICCI) on the aviation sector depicted that there was a need of proper implementation of policies, coupled with reasonable taxes and improved basic infrastructure for the aviation sector to flourish.

The statement revealed on 9 September 2013 at Mumbai showed that just the policy initiatives such as foreign direct investment in airlines and privatising airports was not the solution to help aviation sector come out of the airpocket.

Major highlights of the EY-FICCI Survey on aviation sector

• The survey highlighted that taxation issues were the major impediments for aviation industry.
• The survey also revealed that formation of the Civil Aviation Authority is a vital step for the development of Indian civil aviation sector.
• However, environmental clearances, land acquisition as well as poor infrastructure at the airports were the major obstacles for development of low cost airports in tier II and tier III cities.
• The survey disclosed the fact that liberalised FDI norms had the potential for the development of the aviation sector. 90 percent of surveyed samples were of the view that relaxed FDI norms would bear positive result for the revival of aviation industry in India. This would help in ploughing the expertise as well as required capital in the industry, thereby achieving the economies of the scale as well as driving the competition.
• 59 percent of the respondents of survey revealed that the recent Government measures such as 49 percent of FDI by foreign carriers in Indian airlines as well as direct fuel import would fetch positive results. However, there was a need of stringent implementation of these policies and steps.
• Around 57 percent respondents also said that policy regime as well as high taxation were the hindrances in the growth of this sector.
The aviation industry feels that the Indian airlines lack that playing field in comparison to their foreign counterparts. Thus, there was a need of rationalising tax structure for MRO industry as well as Union and State governments needed to work for enhancing the regional connectivity.

It is also important to note that congestion at the airports was the major reason for poor infrastructure. This leads to an increased airline operating cost and slow pace of development of the low cost airports in tier II and tier III Indian cities.

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