The highly distressed aviation sector which was hoping to get some relief has been left disappointed.

“The government’s relentless focus on national transportation infrastructure development with the PM Gatti Shakti plan will strengthen the much-needed multimodal connectivity and facilitate seamless movement of cargo while reducing logistics costs. Having said that we were expecting tax concession to the Aviation industry in the form of cut in Aviation Turbine Fuel (ATF) excise duty and allocation of concessional finance to airlines to help us come out of the pandemic,” said Ronojoy Dutta, Whole Time Director and Chief Executive Officer, IndiGo

Last year, the Emergency Credit Line Guarantee Scheme (ECLGS) was extended towards the ailing aviation sector among other sectors. However, this year, the finance ministry has increased the budget only for the hospitality sector, and not the aviation sector. 

Nripendra Singh - Global Director (Aerospace and Defence)- Frost & Sullivan said that, “The industry was hoping some announcements for the MRO sector but, there was no specific development on that. It is more or less a neutral budget for the sector. The only ray of hope was the infrastructure development which could, in the long term, include the MRO sector. 

No relief in excise duty

The budget also did not provide any relief on the excise duty on ATF. Instead, the budget document mentioned a reduction of the customs duty on import of ATF from 10 per cent to 5 per cent. 

In fact, on February 01, the ATF prices in India were ₹86036.16 per KL in Delhi which were up by 13.11 per cent over last month, and up 59.93 per cent over last February.

“This year’s budget is extremely neutral, and irrelevant for the aviation sector altogether. The industry really had high hopes.”

“The budget is not relevant for the airline sector at all. Even the reduction on the import of ATF is irrelevant because the industry doesn’t import it and there is not much infrastructure for the same, too,” Ashish Shah - Sr. Research Analyst - Centrum Broking Limited. 

The budget has also earmarked zero outlay for the Krishi Udaan scheme which was launched in August 2020. The revenue earned from the Krishi Udaan scheme was ₹1 lakh in last year, the government expects a similar revenue from it this year, too. 

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