Draft Aviation Policy

On October 30, 2015, the Government of India unveiled the much-awaited draft civil aviation policy, offering a bouquet of measures to make air travel more affordable to the masses. The key propositions include a capped price system to boost regional connectivity and service tax waiver for maintenance, repair and overhaul (MRO) companies. On the flipside, it lacks clarity on the government’s position on the 5/20 rule. The policy also does not dwell on the long-pending structural issue of high sales tax on aviation turbine fuel (ATF), which diminishes the attractiveness of the sector. The government has sought feedback from various stakeholders before the final policy is released. This CRISIL Research impact note analyses the policy.

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