A disappointing budget for the aviation industry

by Devesh Agarwal

Finance minister P. Chidambaram disappointed the Indian aviation industry in his budget presented before the Parliament yesterday.

Last year, then finance minister Pranad Mukherjee, had offered a small relief to the fledgling aviation MRO (Maintenance, Repair, Overhaul) industry by giving a waiver in customs duty for import of spare and testing equipment, but required the spares be used within three months. Other than extending the time limit from three months to a year, Mr. Chidambaram has done nothing for the industry.

More knowledgeable members of the aviation industry realise the importance of keeping spares ready, especially in the aviation industry, where the capital equipment (airplane) is so expensive. A time limit is impractical and should be removed completely.

Despite expectations to the contrary, there has been zero movement on the ridiculous fuel taxation and pricing policy (fuel companies have huge mark-ups on aviation fuel), the short-sighted taxation structure that is ensuring Indian carriers go overseas for their MRO needs, or the ambiguous service tax policy on MRO’s which is leading to prolonged litigation.

The government has also failed to define any financial policy that will enable regional airports to raise funds for their expansion, which defeats the regional airports policy focus of the civil aviation ministry.

Should industry just be content with the fact that they were at least mentioned in the budget. We think not.

Your comments are welcome.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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