Last week, the Narendra Modi government came up with a Draft Civil Aviation Policy that proposes sweeping reforms. In the offing are a hike in FDI cap to more than 50 per cent, tax breaks for maintenance, repair and overhaul (MRO) services, and a review of the 5/20 rule that restricts domestic airliners from overseas expansion.
In an interview to Bloomberg TV India, Civil Aviation Minister Ashok Gajapathi Raju said the 5/20 rule is “retrograde” and needs to be scrapped. The Cabinet will review it in three weeks and the Aviation Policy will be given a final shape by December, he said.
Generally speaking, the aviation policy will have to indicate the thinking of the government. So it has done that as far as totality is concerned and even 5/20 is part of it. Individually I am not for 5/20 because I find it a retrograde step. But it has come out of the Cabinet. The Cabinet at that time (UPA regime) decided that this rule should be there and to me it inhibits the Indian airline industry.
So the idea is that we should do away with it. But then the industry has found its level of comfort or discomfort over the years. So it gives them an opportunity to respond once more. Let’s see. I have to convince my colleagues in the Cabinet that this is a retrograde step.
And I think it’s a matter of time. That is my impression. But I could be wrong also.
So whatever it is, it has to be the policy of a government. It cannot be individual thinking. But as of today it is a thought that is again in the public domain and those who wish to respond can do it in whichever way they can.
We believe the Prime Minister has looked at 5/20 — and also the Draft Civil Aviation Policy — in detail. Is there scope for changing the big issues, especially the 5/20 rule, over the next three weeks?
One thing is for sure. We in the aviation sector have had the benefit of interactions with the Prime Minster.
He has given us some time and he has interacted with us. I don’t think in the past it was ever done. Obviously, those interactions are of a confidential nature. So we will not be saying yes or no. But certain things have come out.
But keeping all those aside, the idea was that before coming out with this policy we have had extensive interactions for some time. In fact, there is a criticism that we have taken too much time to come out with it.
But then we thought it’s wiser to go through that. After all those consultations, this draft paper has come about, and again it is going literally on a second round. But this second round I think will be time-bound and I think, by the time the year is out, the policy will be out. So we are trying to work in that direction. The total concept is how to make our Indian skies vibrant. How to cater to all. Or, rather, overcome the unease that we are seeing now in this sector, and go ahead serving the Indian citizen.
Do you expect the Cabinet to take up the Civil Aviation Policy in another three weeks?
Yes, because we have had extensive discussions at all levels. I don’t see impediments coming up. So once this thing is over we put it into proper shape and put the Cabinet notes, whatever governmental procedures are needed to be taken and take it forward, and take it to its logical conclusion.
Policy by nature cannot be the truth for all times. But it has to travel definitely about three-five years so that the industry can plan accordingly.
So we can’t keep tinkering everyday with things and we can’t have reactions to every situation. So we need extensive consultations and anticipate things before they happen.