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An Open Letter to Mr Arun Jaitley, Hon’ble Finance Minister of India

Issue: 03-2015
Rohit Kapur
President, Business Aircraft Operators Association

Dear Sir,

One more year for the hype of the Union Budget and the one more year of disappointment for the Aviation industry! So what’s new?

With due respect, I would like to state that the Aviation industry in general and the General & Business Aviation (GA/BA) industry in particular, stands disappointed with the Union Budget of 2015, with no direct or indirect mention for the sector. It is interesting to note that GA/BA sector in India started growing rapidly at the beginning of the new century, with the growth rate peaking at 26 per cent by the year 2007, encouraging investment even in remote areas. However, a number of reasons have halted this growth in the past few years, bringing it in the negative zone in the past couple of years. It is disappointing to see that the present, and most previous governments, have not realised the potential of air connectivity as an economic enabler to bring about progress in the remote areas of the country. While a full day is devoted to the Railway Budget and a huge amount of time spent on building the highways, Sir, it is disappointing that a forward looking and growth oriented Finance Minister such as you did not think it was worth your while to even mention the aviation sector in the entire budget speech. This can only come from a mindset which sees aviation in general, and GA/BA in particular, as an elitist industry, and not something which adds to the development of the country. May I point out that the present Prime Minister would not have been able to address 400 rallies in three months during the General Elections of 2014 and yet spend every night in Ahmedabad if it was not for the availability for GA/BA aircraft and helicopters!

The demands of the industry are well known and projected to all concerned. It is time that the Government of the day starts addressing it, or else our dream of becoming the third largest aviation industry in the world by 2020 will remain just that...a dream!

Sir, at the risk of repeating myself, once again, this is what we need:

  • Rollback of CVD on import on private aircraft. CVD is imposed to protect the domestic industry. However, there is no worthwhile aerospace manufacturing in India in the field of civil aviation, hence its rationale is not understood. It has proven to be counterproductive and is the most important reason for the growth coming to a grinding halt. Not surprisingly, it has not added substantially to the revenues of the Government too, as facts can prove. This needs to go.
  • Tax holiday on MROs to import spares and carry out MRO activities. 90 per cent of our MRO business is done outside India due to high taxations, resulting in outflow of foreign exchange. Our aircraft are being serviced in Sri Lanka and Bangladesh! Do we need to say more...
  • Rationalise taxes on the ATF. This discussion has been going on for the past 15 years, yet nothing has happened.
  • To encourage remote and regional connectivity, involve the State Governments and create infrastructure. Provide sops to investors in terms of waiving off landing/parking charges, RNFC, allow self-handling and assure business by underwriting seats. The money spent by the State Governments will be more than made up by opening up the remote areas to industry, business and tourists. It will generate employment for the unemployed in the state and bring in new opportunities.
  • Create an Essential Air Service Fund, as is done in most countries such as USA, Brazil, Australia, etc. As per estimates from experts, a one-time allocation of Rs. 1,000 crore to begin with, will open up remote connectivity in the country. This is less than what the present Aam Aadmi Party (AAP) Government has given in terms of subsidies to Delhi citizens for subsidised electricity and free water...
  • Allocate funds to develop aviation infrastructure. We need low-cost airports, heliports to increase connectivity, aviation skill development institutions and special GA airports. Unless we cater and allocate for them, this will never happen.
  • Lastly, and most important, allocate funds to reconstitute the DGCA and BCAS as independent bodies to be run by technocrats and professionals, rather than an extension of bureaucrat’s domain. The Civil Aviation Authority (CAA) is an idea which is past its time and needs to be implemented. This is a specialised industry and needs to be managed as such. Domain knowledge is essential, failing which the present state will continue.

Yours sincerely.