New Delhi: The
Indian airline industry today got a major relief with the government
allowing it to raise capital through external borrowings worth USD one
billion for a year, as it planned to allocate Rs 4,000 crore to ailing Air
In a bid to encourage the nascent maintenance, repair and
overhaul (MRO) sector, it also proposed to allow full exemption from
customs duty and countervailing duty to aircraft spares, tyres and testing
Introducing the 2012-13 Budget, Finance Minister
Pranab Mukherjee acknowledged that the airline industry was facing a
financial crisis and the high operating costs of the sector was "largely
attributable" to the jet fuel cost. "To reduce the cost of ATF, Government
has permitted direct import of ATF by Indian carriers, as actual users."
order to address the immediate financing concerns of the civil aviation
sector suffering from a major capital scarcity, he proposed to permit
"External Commercial Borrowings (ECBs) for working capital requirements of
the airline industry for a period of one year, subject to a total ceiling
of USD one billion."
He also said that a proposal to allow
foreign airlines to participate up to 49% equity of an airline company,
operating scheduled or non-scheduled services, was "under active
consideration of the government."
While the central plan outlay
for Civil Aviation Ministry in 2012-13 is estimated at Rs 7,293 crore, a
demand for plan allocation of Rs 4,000 crore to Air India in the next
financial year has also been proposed in the Budget.