Union Budget 2021: Positive changes in 'Civil Aviation' to promote 'Atmanirbhar Bharat'
10 Feb 2021 11:34:59
New Delhi, Feb 10: The Union Budget announced for FY 2021-22 provides several positive measures for the aviation industry of the country. The measures range from tax incentives and custom duty reduction for promoting 'Atmanirbhar Bharat', to asset monetization and disinvestment to mobilize resources for new infrastructure development. The comprehensive review of the budget proposals indicates that the Ministry of Civil Aviation has aimed at creating opportunities for strengthening the aviation eco-system in the country and developing India as an aviation sector manufacturing hub.
According to the recent release, the Union govt is committed to make the International Financial Services Centre (IFSC) in the Gujarat International Finance Tec (GIFT) City, which is a global financial hub. In addition to the tax incentives already provided, the current budget proposed more tax incentives which includes tax holiday for capital gains incomes of aircraft leasing and financing company, tax exemptions for aircraft lease rentals or royalty paid to foreign lessor, tax incentive for re-location of foreign funds in IFSC and tax exemptions to investment division of the foreign banks located in IFSC.
The tax exemptions are a major boon to lessors operating from IFSC. The exemptions would help in establishing a vibrant aircraft leasing and financing environment in India, besides offering better terms to Indian and foreign carriers. These measures follow a series of initiatives that the Ministry of Civil Aviation has undertaken since 2019, in order to create an aircraft leasing and financing ecosystem in GIFT city of India.
According to the budget proposal, Customs duty has been reduced from 2.5 to 0 per cent on aviation sector components or parts, including engines, for manufacturing of aircraft under Public Sector Units of the Ministry of Defence. The measure will help in growth of the aviation industry in the country by reducing cost of inputs for domestic manufacturing and thus promote 'Atmanirbhar Bharat'.
The budget proposed monetization of the next lot of airports for operations and management concession and other core infrastructure assets that will be rolled out under the Asset Monetization Programme are AAI Airports in Tier II and III cities. The Airport Authority of India is working on the next round of privatization in which 6-10 airports will be included. Six airports have already been awarded to the successful bidder and the concession agreements have been signed. Further progress in the initiative will help the Ministry of Civil Aviation to complete the goal of building 100 new airports by 2024.
The implementation of 'Atmanirbhar Bharat' in the Aviation sector will also be executed under a new centrally sponsored scheme of 'PM Atma Nirbhar Swasth Bharat Yojana'. The Union budget 2021-22, under the scheme has proposed development of health system capacities in the country which also include aviation entry points. The program will facilitate strengthening of Public Health Units at 32 airports and also smooth movement of pharmaceuticals through air across India and in other parts of the world as well.
Another major change that is to take place in the coming time in the Civil Aviation sector, is the process of strategic sale of Air India, which is already underway and the 'Expression of Interest' (EOI) has been received. The govt has reiterated its commitment of disinvestment of Air India and PawanHans in 2021-22 through Union Budget 2021-22. The PIM for the sale of Pawan Hans has also been issued. The Preliminary Information Memorandum (PIM) for Air India Airports Services (Ground handling) is under preparation.
In addition to boost value addition in agriculture and allied products and their exports, the scope of ‘Operation Greens Scheme’ that is presently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products. The Krishi Udaan Scheme stands converged with Operation Greens through air freight subsidy of 50 per cent for the agri-perishables of NER States and four Himalayan States/UTs. The expansion of product-coverage will boost the Krishi Udaan Scheme and improve air cargo transportation from these States.
