The ministry of civil aviation on Wednesday moved the commerce ministry asking it to take steps to facilitate direct import of aircraft turbine fuel (ATF) by Indian carriers.
An empowered group of ministers on civil aviation had, on 7 February, decided that the commerce ministry will permit direct import of ATF by or on behalf of Indian carriers directly on `actual user' and `actual use' basis (See: Government approves direct jet fuel imports, AI revamp plan).
The decision comes against the backdrop of aviation fuel prices in India rising 30 to 40 per cent above its prices in the international market, due mainly to high base price and higher tax rates.
The sales tax rates on ATF in different states in India are much higher, and vary between four to 30 per cent in different states.
The minister of civil aviation has recently written to all state chief ministers asking them to bring down the rate of sales tax on ATF in order to make ATF cheaper for the Indian carriers.
It may be mentioned that the revenue from sales tax on ATF contributes only 0.5 per cent to 2 per cent of the total sales tax collection of the states while in terms of operational cost of the airlines its portion is almost 40 per cent, which makes the operational cost of the airlines very high.