Government allows airlines to import jet fuel directly

The government today issued a notification allowing Indian scheduled airlines to directly import aviation turbine fuel (ATF) or jet fuel instead of buying it locally, agreeing to a key demand of the cash-strapped carriers.

Airlines wanting to import ATF would have to apply to the Directorate General of Foreign Trade (DGFT) for an import licence, an official press release said today.

The group of ministers (GOM) on civil aviation, headed by finance minister Pranab Mukherjee, had considered the matter at its meeting on 7 February 2012 and decided that the ministry of commerce may permit direct import of ATF by or on behalf of Indian carriers as actual users and on actual use basis.

As of now, import of ATF bearing ITC (HS) Code 2710 19 20 is under state trading regime and only certain state trading enterprises of the Government of India are permitted to import ATF.

India's Foreign Trade Policy for 2009-14, however, permits the DGFT to grant an authorisation to any other person to import or export any goods exclusively allowed by STEs. Therefore, import of ATF could also be permitted to Indian carriers.

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.