New Delhi, Oct 30
Indian government on Friday proposed tax incentives for airlines, maintenance and repair works of aircrafts besides mooting 2 per cent levy on all air tickets to fund regional connectivity scheme.
In a significant move, the Civil Aviation Ministry has pitched for over 50 per cent Foreign Direct Investment (FDI) in domestic carriers in case the open skies policy is implemented.
Under open skies policy, overseas airlines can operate unlimited number of flights into and out of India. At present FDI limit is 49 per cent. Presenting the revised draft national aviation policy here, the Ministry has proposed 2 per cent levy on all domestic and international tickets for regional connectivity scheme.
The policy moots various measures to boost regional connectivity including setting up of no-frills airports and providing viability gap funding for airlines.
Another proposal is to cap fare at Rs 2,500 for one-hour flight under regional connectivity scheme. To make MRO (Maintenance Repair, Overhaul) cheaper, the government has proposed to exempt such activities from service tax net and not levy any VAT.
However, the government has decided to seek more comments from stakeholders before taking a final call on 5/20 norms — whereby local airlines can fly overseas only when they have five years operational experience and at least a fleet of 20 aircraft.
