The Union budget has left India’s civil aviation industry disappointed with executives saying that the government has failed to address most of its expectations, especially tax concessions to lift it out of the crisis caused by the pandemic.
The industry has been one of the worst hit by the pandemic and related restrictions on mobility that has severely hit operations, according to airline executives. This is in addition to high operating costs, especially due to rising oil prices.
“While the industry was not expecting a financial aid from the government, making provisions for tax breaks and eligibility for input tax credit would have gone a long way in helping the sector that has been under huge financial stress due to the pandemic," a senior airline executive said on the condition of anonymity. “The government hasn’t addressed the concerns of the sector at all in the budget," the official said.
Rating agency Icra Ltd has forecast India’s aviation industry to report a net loss of ₹25,000 crore- ₹26,000 crore and its debt levels rising to ₹1.2 trillion this financial year.
Meanwhile, about 7,900 employees in the aviation sector have lost jobs in the last one year, V.K. Singh, junior civil aviation minister, told the Parliament in December.
In January, IndiGo asked the government to cut indirect taxes on the aviation sector to boost commerce and employment. In a post-budget statement, IndiGo’s chief executive Ronojoy Dutta, while lauding the budget outlay on infrastructure, said the carrier had expected tax relief in the form of lower excise duty on jet fuel and concessional finance to airlines.
Overall, the FY23 budget has sanctioned ₹10,667 crore for the civil aviation ministry. This includes ₹600 crore towards reinvigorating the regional connectivity scheme, while AIAHL, a special company housing Air India’s debt, has been allocated ₹9,259.91 crore to allow servicing of loan transferred to it post the financial restructuring of Air India.
“Though Budget has raised allocation for aviation sector from last year (i.e. from ₹3,224 crore to ₹10,667 crore), it does not really provide any immediate relief to the struggling sector," said Poonam Verma, Partner, J. Sagar Associates (JSA).
