By TIOL News Service

NEW DELHI, FEB 17, 2012: THE Ministry of Civil Aviation has asked the Ministry of Commerce to take steps to allow direct import of Air Turbine Fuel (ATF) by Indian carriers in pursuance of the decision of the Group of Ministers' (GOM) on Civil Aviation, which was taken in the GOM meeting held on 7th February 2012. The GOM in its meeting decided that the Ministry of Commerce will permit direct import of ATF by or on behalf of Indian carriers directly as the actual user and on actual use basis.

The decision has come against the background that ATF prices in India are 30 to 40 per cent more than the prices in international market due to high base price and higher taxes. The Minister of Civil Aviation has recently written to all Chief Ministers of the States to bring down the rate of sales tax on ATF in order to make ATF cheaper for the Indian carriers. The Indian carriers would have to make their own tie-ups with the suppliers having infrastructure to import ATF directly for their use. The sourcing of ATF through direct imports has the potential to lower overall procurement cost of ATF for the airlines as sales tax varying from 4 to 30 percent in different States will be required to be paid only on unavoidable local purchase. Also this would bring down the cost of working capital to the air lines as suppliers credit on lower interest rates will be feasible.