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Patel seeks service tax relief for airlines

autos Updated: Mar 03, 2010 21:40 IST
Lalatendu Mishra

The Civil Aviation Ministry will soon petition the Finance Ministry to seek the removal of air travel from the ambit of service tax in an attempt to help the struggling sector.

Civil Aviation Minister Praful Patel said on Wednesday that the sector needed a helping hand as it was in a recovery mode with cautious optimism.

“On behalf of the sector, we (the ministry) will take up with the Finance Ministry on the service tax issue. We hope that the finance minister may consider our request. We will make the request when airlines are coming out from a troubled period,” Patel said at the Indian Aviation 2010 international convention jointly organised by his ministry and industry chamber FICCI.

The budget for 2010-11 presented last week brought in air travel in the service tax ambit.

Patel said the industry was poised for global scale growth.

“As the sector is growing with an annual compounded grow rate of 18 per cent, it has a long way to go. Commercial aviation, general aviation, cargo are growing and so are allied services,” he said, adding that India had a huge potential to become a major supplier of software and hardware for the global aviation industry.

The minister said currently only 3 per cent of Indians were flying and a surge to 10 per cent will fan frenetic growth.

“We need 400 airports as compared to the existing 90 operational airports, we will need 500 additional helicopters in five years and 200 to 300 additional commercial airplanes in next five years,” he said.

Over 200 national and international delegates are attending the five-day summit.

Patel said that after two turbulent years the aviation sector had started looking up. “Based on growth of the past few months, we are looking at 2010 with cautious optimism. We hope by the year end the worst would be over,” he said.

A large number of US and French aviation companies are making a strong bid to invest in India in various areas of production of aviation goods and services. Over 40 aircraft from different manufacturers are on display at the air show.