At least 16 Indian states have reduced VAT on aviation fuel while the GST rate on maintenance, repair and overhaul (MRO) services have been reduced to 5 per cent (from 18 per cent), VK Singh, Union Minister of State for Civil Aviation, said in a written reply to the Lok Sabha on Thursday.

According to him, Indian airports carried around 83 million domestic passengers in 2021-22, registering a growth rate of 59 per cent as compared to 2020-21.

However, domestic passenger traffic is yet to reach pre-pandemic levels, when around 136 million (in 2019-20) was carried. Between pre-pandemic levels and last fiscal, domestic passenger traffic was down 39 per cent.

“Challenges that affect the profitability of the domestic aviation sector include high cost of aviation fuel, foreign exchange variations, constrained airport infrastructure, highly price-sensitive customers etc,” a statement by the Centre said.

Positive response

Singh said, the 16 States/UTs which “responded positively” and brought down tax on aviation fuel include, Andaman and Nicobar Islands; Arunachal Pradesh, Dadra and Nagar Haveli and Daman and Diu; Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir; Jharkhand, Karnataka, Ladakh, Madhya Pradesh, Manipur, Mizoram, Tripura, Uttar Pradesh and Uttarakhand.

He added that a conducive aircraft leasing and financing environment has been enabled and improvement in air navigation infrastructure is being carried out to enable better utilisation of airspace and airport capacity.

Investment plans

In order to reduce congestion at airports and also address the challenge of sub-optimal infrastructure, the Airports Authority of India (AAI) has taken up development of new and existing airports with a projected capital expenditure of around Rs. 25,000 crore in next five years.

The investments will be made across setting up of new terminals, expansion and modification of existing terminals, expansion and/ or strengthening of existing runways, aprons, Airport Navigation Services (ANS) infrastructure, control towers and technical blocks, among others.

The Public Private Partnership (PPP) airports at Delhi, Hyderabad and Bengaluru are undertaking major expansion projects of around Rs 30,000 crore by 2025.

An additional, ₹36,000 crore has been planned for investment in the development of new Greenfield airports across the country under PPP mode.

Greenfield airports

Incidentally, the Centre has accorded ‘in-principle’ approval for setting up of 21 Greenfield Airports across the country.

So far, eight Greenfield airports namely, Sindhudurg and Shirdi in Maharashtra, Durgapur in West Bengal, Pakyong in Sikkim, Kannur in Kerala, Orvakal in Andhra Pradesh, Kalaburagi in Karnataka and Kushinagar in Uttar Pradesh have been operationalised, he mentioned in his response.