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Govt needs to lower taxes on Indian aviation sector, make it more competitive: Ajay Singh, SpiceJet chief

Ajay Singh said the sector is highly taxed, which is a major stumbling block in making it globally competitive.

Updated: Oct 21, 2019, 08.48 PM IST
Emphasising the need for a holistic approach, SpiceJet chief Ajay Singh has called for lowering of taxes on the aviation sector to make it more competitive as well as ensure that the costs are in line with the peers. The Chairman and Managing Director of the budget carrier, which is expanding rapidly, also said that MRO (Maintenance, Repair and Overhaul) is an area where India can be doing exceedingly well.

In an interview to PTI here last week, Singh said that civil aviation sector in India is highly taxed, which is a major stumbling block in making it globally competitive. "I think (there is need for) lowering of taxes and looking at aviation in a holistic sense as a job creator, as something that connects India to itself and to the world. It's important that we take a more holistic approach towards aviation," he said. Singh was in Washington DC last week as part of a business delegation that accompanied Finance Minister Nirmala Sitharaman.

"What we have been asking for a very long time now is that the government should make Indian aviation competitive with its peers around the world. We should make sure that our costs are in line with our peers around the world," he said. He noted that India is the only country which taxes aviation fuel at an average of about 35 per cent. Fuel is a major component of an airline's operational costs.

Since Indian carriers are seeing a much higher cost of operation, they are not competitive compared with others and that is one big issue, he added. The second big issue is on the maintenance and repair operations. In maintenance and repair operations as well, we pay a GST (Goods and Services Tax) of 18 per cent, he said, adding that "we can be repairing our own aircraft". We have the engineering skills. We have the people in India to do this. We have the infrastructure to do it. We have the skills. And despite that a lot of repair and overall active activity actually happens overseas because of the high tax in India.

"So you have to moderate taxes. India can be a huge global base for repair and overall not only for the airlines within India, but for for airlines outside India. So that's a space that we certainly need to look at," Singh said.

SpiceJet, which operates 550 flights on a average every day, has a fleet of 77 Boeing 737s, 32 Bombardier Q-400s and three Boeing 737 freighters, as per a release issued in September.

Singh also stressed that India should have its own international hubs like Dubai, Abu Dhabi, Doha, Singapore and Bangkok, and stop exporting traffic into these hubs. "It is important for a large country like India to have people go directly from Delhi, Bombay, Bangalore and Hyderabad to Europe and the US and the far east. So, we need to ensure that a policy action is taken on that front," Singh said.

Noting that India should start looking at the aviation sector in a holistic sense, the SpiceJet chief said that among BRICS grouping, India remains the only one where there is no major assembly facility of either Boeing or Airbus.

"I think on engine repair for example, again, we need to ensure that larger engine makers like CFM or Pratt & Whitney and or Rolls Royce start by setting up at least maintenance and repair facilities within India," Singh said. "The corporate sector as well as the government have to work aggressively with foreign companies that own the technology to encourage them to build in India," Singh said.

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