Thursday, February 9, 2012

India to Allow Carriers to Import Fuel, Avoid Fuel Tax

Indian aviation minister Ajit Singh announced that, subject to cabinet approval, the Indian government has decided to allow Indian carriers to import jet fuel directly to avoid the significant sales taxes currently increasing fuel costs by approximately 24 percent. See Neil Munshi, India Aviation Gets a Fuel Lifeline, Financial Times, Feb. 7, 2012 (available here). While some analysts cautioned that cost savings would be mitigated somewhat by the costs of the infrastructure needed to import the fuel, this change is still seen as highly beneficial for Indian airlines. Combined with the anticipated removal of the ban on investment by foreign carriers, this move reflects a recognition by the Indian government of the severity of the problems facing the Indian air transport industry and the need to reform a regulatory regime that has contributed to the industry's struggles.

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