A high-level Group of Ministers on Tuesday decided that airlines be allowed to import aviation turbine fuel (ATF) directly from overseas and also recommended Air India be authorised to issue government-guaranteed bonds worth `7,400 crores to financial institutions to raise funds for its financial restructuring plan. Both of these need to be cleared by the Union Cabinet before being implemented.
Some private airlines feel they can save money by not paying high sales tax to states by directly importing ATF.
The move to allow direct ATF imports is seen as a way to improve the financial health of the airline industry, but it remains to be seen if it draws objections by states which stand to lose sales tax revenue.
Civil aviation minister Ajit Singh said Tuesday that the airlines “will be allowed to import fuel directly for their use”. He spelt out: “The Group of Ministers approved this. It has to go to the Cabinet.”
On the possible issue of bonds by Air India, the minister said: “Bonds can be issued, but there are other ways.”
The Group of Ministers cleared a financial restructuring plan for the state-owned airline, and while the issue of bonds is a strong option, another is for the government to grant `7,400 crores upfront to the national carrier.
Top civil aviation ministry sources told this newspaper that the basic objective of allowing direct imports was to give Indian carriers the opportunity to buy aviation turbine fuel at the same prices at which other major international airlines procure it.