The civil aviation ministry is mulling a change in the guidelines for non-scheduled operators (NSOPs), to ensure individuals or companies buying aircraft for private purposes cannot do so under the NSOP category at lower import duty and then divert it for personal use.
Minister Ajit Singh said, "We are looking at route dispersal guidelines to encourage connectivity and we will be going with a code-share arrangement between non-scheduled operators and commercial airlines for connectivity to tier-III and tier-IV cities (a code share is where two or more airlines share a flight). We are also looking to see if we can put guidelines for NSOPs, so that people can't import jets at lower tax and then use it as private ones."
Singh said the ministry was looking into duties, too. "We want some adjustments, so that there isn't a wide variance in the duties (on imported jets).
There are some anomalies and we are looking at what these are, what the problems are, why they should be charged differently. Almost all these private players, when they get these planes, rent it out."
The import duty charged on non-scheduled operators is around two per cent; and for private jets, it is around 21 per cent. Before 2007, there was no import duty.
Welcoming the government's move of code-sharing between non-scheduled operators and commercial airlines, Rohit Kapur, president of the Business Aircraft Operators Association, said: "It is a brilliant idea and will be a big boost for the sector.
In 2008, India imported 73 planes for non-scheduled operators, whereas in 2012, only six aircraft have been imported."
"This differential in import duties should not be there, as it is unnecessary policing and creates a loophole in the system." Kapur said there was a lack of policy for business aviation. Better interaction between stakeholders was required.
Business aviation faces several challenges primarily because there is no clear policy framework to address concerns
TAXATION: Import duty on private jets 21%, and on non-scheduled operators (NSOP)-2% Individuals or companies buy aircraft under NSOP category and then divert it for personal use
LACK OF BUSINESS AVIATION INFRASTRUCTURE IN AIRPORTS: No business aviation terminals, heliports and limited hangar and parking space. No incentive for airports as business aircraft can seat only 10-15 passengers
TAXING ISSUES: Maintenance, repair and operations services are expensive in India. Huge taxation on import of aircraft spares (service tax of 12%) and other levies come in the way of development.