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Regulations are Here to Stay but Rules for the Sake of Rules Have No Play; Minister Ashok Gajapathi Raju
Jul 14, 2015

The Government is set to announce a new aviation policy shortly to boost growth and ease business in the sector minister for Civil Aviation Mr. Ashok Gajapathi Raju Pusapati said. 

Speaking at a conference “Aviation Day” on Tuesday in the capital organized by CII in partnership with the Ministry of Civil Aviation and IATA, Mr Raju said that while all measures will be taken to ease the investment climate, there is an equal need for rules and regulations as well. “There is a need for rules but rules and regulations but they will not be kept just for the sake of rules,” the minister said.

Elaborating on the new aviation policy that is expected to be taken up by the cabinet shortly, secretary civil aviation R N Choubey said that the aviation policy would look at three major pillors- reducing cost of acquisition of aircrafts and airports and working with states to moderating taxes on ATF at the state level. “We are working to see that all states can bring down the VAT rates to 4% on ATF; This is crucial as India has to import crude oil and moderate fuel prices are a key component to making the industry competitive,” he said.

Earlier, Mr Raju, asserted that regulations are here to stay, but rules will have to be amended for the growth of the sector. Different countries have experimented with different regulations as each country is unique in its market structure and design. India, which is known to be complex market, will have to borrow ideas from different markets and will have to modify these Ideas as per requirement to ensure growth of the aviation industry.

The minister emphasized that Industry, Government of India and the States Government will have to work together to drive India’s emergence as the 3rd largest Global Aviation Market. The Government, he said, is committed in its resolve to ensure ease of doing business and is moving in that direction.

Mr Tony Tyler, Director General and CEO, International Air Transport Association who also spoke at the inaugural session complemented the Prime Minister and his cabinet for focusing on the aspect of ease of doing business in the country. Indian aviation market is estimated to be valued at 282 million dollars by 2031 and will exceed a market value of 360 billion dollars post FY34, he said.

While the aviation sector in the country will continue to grow, it is important that the Government improves business sentiment in the sector and contribute significantly to the growth of the Global Aviation Industry. The roadmap to success of the industry lies in simplifying multiple layers of taxation & fuel pricing regime and in making the regulator (AERA) independent. Speaking of challenges, he said, players in the Indian aviation sector are reeling under billion plus losses even when profitability of the global aviation industry exceeds its cost of capital. While the government continues to address some of the issues in the sector, it is important that India adopts some of the global best practices to further the growth in the Aviation industry. 

Mr Sanjay Reddy, Chairman, CII National Committee on Infrastructure & Vice Chairman, GVK Power and Infrastructure  in his introductory remarks emphasized on the need for a healthy aviation industry. The aviation sector in the country needs to be made a profitable business venture, as huge amount of capital is required to support future growth of the sector. Currently, Indian aviation industry is growing at an average growth rate of 13 – 15%, while at the same time certain parts of the country is witnessing a growth rate of as high as 30%. Success, he said, lies in collaborative approach and suggested that Ministry of Civil Aviation could form a Committee having all stakeholders including Airlines and Airports to work together and make India the 3rd largest aviation market in the world.

The Session was also addressed by host of other senior officials from the Government and CEOs from several Airlines across the globe.

14 July 2015 
New Delhi

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