The Budget has delivered a mixed bag for the Indian aviation sector. Air India has been provided ₹2,500 crore as against its request for ₹ 4,277 crore.
The funds have been provided despite Finance Minister Arun Jaitley announcing in his Budget speech that the Government will look at disinvestment in loss-making units and some strategic disinvestment. The airline’s net loss came down to ₹5,389 crore in the last fiscal, compared with ₹5,490 crore in financial year 2013, and ₹7,559.74 crore in FY12.
Budget 2015-16 also provides ₹80 crore to the Airports Authority of India, of which ₹ 22 crore has been earmarked for the new greenfield airport coming up in Pakyong, Sikkim.
The decision to increase the service tax to 14 per cent will see flights becoming more expensive.
Meanwhile, Amber Dubey, partner and India head, aerospace and defence, KPMG, termed the Budget as a disappointing day for aviation. “The beleaguered industry's long-pending expectations of tax rebates on aviation turbine fuel, maintenance repair and overhaul services (MRO), airports and general aviation, have been ignored yet again. Higher service tax will enhance airfares. Loss of MRO revenue, jobs, and taxes to Sri Lanka, ASEAN and the Gulf countries will continue,” Amber pointed out.
The proposal to increase visa-on-arrival to 150 countries is a welcome step that will boost tourism as well as aviation in the country. Moving towards a unified GST regime will also help unify taxes across the country and will be helpful to the aviation sector, said Ajay Singh, founder and now promoter, SpiceJet .