Government notifies direct fuel import by airlines

New Delhi -  The Indian government Wednesday notified direct import of jet fuel -- a long standing demand of the domestic airline industry -- and called upon the interested carriers to apply  for licences.

"Indian carriers interested to avail the opportunity to import ATF (air turbine fuel) directly without going through STE (state trading enterprises) route may apply to the DGFT (Directorate  General of Foreign Trade)," the commerce ministry, under which the DGFT functions, said in a statement.

Before the notification, jet fuel came under restricted import items that could only be imported by certain public sector undertakings like the oil marketing companies (OMCs).

On Feb 7, a group of ministers (GoM) headed by Finance Minister Pranab Mukherjee had rolled out a plan to help domestic carriers allowing them to directly import aviation fuel.

The civil aviation sector, one of the fastest growing, has seen major private airlines bleeding as rising prices of ATF caused by high sales tax and other levies dented their margins.

The move will enable airlines to cut operating costs by about 10-15 percent, saving on sales tax, which ranges between three and 35 percent and is levied by state governments, when they  directly import jet fuel as an end user.

Jet fuel now comprises about 50 percent of the total operating cost of airlines in India.

Domestic airlines are estimated to have lost around Rs.3,000 crore in the first six months of this fiscal.