Budget 2024: Aviation Sector Hopes For Policy Reforms, Financial Support

As India braces for the Union Budget 2024, the aviation sector stands at a critical juncture, ready for transformative policy interventions and strategic investments. Amidst global turbulence caused by the Covid-19 pandemic, the aviation industry has been hit hard, facing unprecedented uncertainties.

Experts in the aviation sector voice their expectations, emphasising the need for strategic reforms and policy interventions to navigate the challenges and capitalise on growth opportunities. 

Nishant Pitti, CEO and Co-founder, EaseMyTrip highlighted the significance of rejuvenating the tourism sector. "We expect the government to allow GST input on holiday businesses, a strategic reduction in income tax to catalyze growth in the country's tourism industry, and the streamlining of the TCS structure to a more favourable 5 per cent slab."

Pitti also stresses the importance of expanding tax exemption policies related to Leave Travel Allowance (LTA) to bolster domestic tourism and infrastructure development across various travel modes. "We expect a comprehensive overhaul of tax exemption policies related to Leave Travel Allowance (LTA), urging the government to consider an annual allowance and the inclusive coverage of the entire tour package cost under LTA, surpassing the limitation to only flight expenses."

"Recognising the vast, underleveraged potential of India's waterways, which includes sea and river cruising opportunities, we strongly urge the Government to undertake necessary measures for developing this sector," he added.

Meanwhile, Non-scheduled Operators (NSOPs) have been facing issues related to customs and aircraft leases. Kanika Tekriwal, Founder of Private aviation group JetSetGo expresses concern by saying, ‘’As Jetsetgo Aviation Private, we have several expectations from the budget in 2024. Firstly, we hope the government will address the customs issues faced by non-scheduled operators bringing aircraft on leases. Currently, there is no clarity on the customs tariff for these imports, and we face difficulties in filing a Bill of Entry." 

"We hope that the government will provide an exemption on customs for Non-Scheduled Operators, similar to what is available for scheduled air operations," she added.

The Indian government's flagship initiative, the UDAN scheme, is expected to surpass the Rs 1,000 crore mark in 2024, thus improving regional air connectivity. Akshat Khetan, Founder of AU Corporate Advisory and Legal Services said, "For the 2024 budget, the Indian aviation sector has precise expectations, anchored in statistical benchmarks. A key focus is on a substantial increase in the allocation for the UDAN scheme, potentially exceeding the INR 1,000 crore mark, to enhance regional air connectivity. 

Investment in airport infrastructure is anticipated to grow by at least 15-20 per cent compared to the previous year, targeting the development of new airports and upgrading existing ones, especially in tier-2 and tier-3 cities. The sector also seeks a reduction in Aviation Turbine Fuel (ATF) taxes, aiming for a 5-8 per cent cut, to alleviate the financial strain on airlines."

Khetan stresses the importance of GST rationalisation on MRO services to foster growth and sustainability in the aviation sector. "The sector hopes for GST rationalisation on MRO (Maintenance, Repair, and Overhaul) services to boost this segment, expecting a reduction from the current 18 per cent to about 5-8 per cent, aligning with global standards. These measures are anticipated to stimulate a 10-12 per cent growth in passenger traffic, aiding in the post-pandemic recovery of the sector," he concludes.

In anticipation of the union budget 2024, with a focus on infrastructure development, technology integration, sustainability and innovation, stakeholders remain optimistic about the sector's resilience and potential to emerge stronger in the post-pandemic era.

As the budget deliberations unfold, the industry eagerly awaits tangible policy outcomes and budgetary allocations that will shape the trajectory of India's aviation landscape, steering it towards sustainable growth and global competitiveness.