March 22, 2016 TnH Global 0

Overall a balanced budget with stress on development: Ankur Bhatia

“The budget for 2016-17 is for heartland of India, which is overall focused on agriculture, infrastructure development, education and health,” says Ankur Bhatia, Executive Director, Bird Group

Bhatia, who is also a member of CII National Committee on Civil Aviation, said that the Finance Minister this year has laid emphasis on rail and road infrastructure developments as well as on new start-ups and Make in India campaign, which are good measures. “We welcome the Cabinet’s decision of reviving underserved airports by allocating a budget of 50 – 100 crores each, developing 10 out of 25 non-functional airstrips in partnerships with state governments, which I believe will definitely accelerate the development of regional aviation sector and will also give a well deserving boost to the overall aviation sector,” said Bhatia. However, he added that levying of additional cess in hospitality, could have been avoided as the industry is already burdened with taxes. “We do hope that the cess levied on combustion will be used for a betterment and development of green vehicles and infrastructure. Overall a balanced budget with emphasis on development,” said Bhatia.

According to Jayant Nadkarni, President, Business Aircraft Operators Association, developing new airports is always good. But we already have many airports without much connectivity. For operations to commence, we need clarity on funding, taxation, duties, and incentives. “These are yet to come together for the small aircraft sector in business aviation and in scheduled commuter flights to remote areas. The potential for growth clearly exists,” said Nadkarni.

“We welcome, Cabinet’s decision of reviving underserved airports by allocating a budget of 50 – 100 crores each, developing 10 out of 25 non functional airstrips in partnerships with state governments, which I believe will definitely accelerate the development of regional aviation sector and will also give a well deserving boost to the overall aviation sector.”

Commenting on the Budget presentation, Peeyush Naidu, Partner, Deloitte Touche Tohmatsu India LLP said, “The growth of civil aviation in India over the last decade has been phenomenal. India is now on course to become an even larger aviation market. The Ministry of Civil Aviation through its Draft National Civil Aviation Policy 2015 proposed an inclusive expansion plan for the aviation sector by promoting regional air connectivity. The Finance Minister in his budget speech focused on development of 160 non-functional airports at a cost of ` 50-100 crore each along with 10 of 25 defunct airstrips in partnership with state governments. This move will facilitate creation of necessary infrastructure for enhancing regional air connectivity and providing access by air to more parts of the country.”

Continuing on the reform agenda, Union Budget 2016 is built on sharp forward-looking themes towards achieving economic growth. There will be positive impact of various initiatives announced on the tourism & hospitality sector. Significant allocation of ` 97,000 crore to expedite expansion of “highways and rural roads will be one of the strongest boosts to our economy. This will facilitate rapid growth of the tourism sector. Significant funds allocated in Rail Budget in improving passenger amenities, technology enabled travel, and catering and overall customer experience enhancement initiatives will boost passenger growth. Cruise tourism is also expected to be augments, though at a slower pace, once Sagarmala is under implementation,” Jaideep Ghosh , Partner and Head – Transport and Leisure, KPMG in India.

Development of under-served airports and airstrips will facilitate deeper connectivity has the potential to augment passengers traffic including tourists. “Enabling a seamless ecosystem for road travel for passenger across states has been a long-standing task and will reinforce public transport, provided relevant states quickly agree to a common framework. Proposed simplification of customs procedure for international passengers’, in addition to already-existing evisa for several countries, is expected to result in faster achievement of international travellers,” said Ghosh.

Tourism sector is among the highest employment generation and skill development and rural development steps announced will benefit the sector over a longer period of time. Besides, overall initiatives announced for rural & social sectors, investments in physical infrastructure, job creation, tax reforms, technology reforms, and enhancements in Ease of Doing Business will have a positive impact on the tourism & hospitality sector.

Kabir Bogra, Associate Partner, Khaitan & Co observed that the FM in his budget speech has mentioned that the government is looking to develop 160 non-functional airports, at a cost of 50 to 100 crores each and will also develop 10 defunct airstrips with state governments. “If effectively managed these investments would provide a huge impetus to regional airlines and help in unlocking a significant potential in civil aviation in the India. This is likely to be undertaken under the PPP model,” said Bogra.

Bogra added, “The other significant announcement for the aviation industry comes in the form of incentivizing the MRO sector. This has been done in two steps. As a first step, the Customs exemption under notification number 12/2016 has been extended to a wider variety of equipment and tools required to be imported by a MRO service provider and secondly, Customs duty on aircrafts imported for undertaking repairs has also been completely exempted. In fact the exemption has been completely streamlined with operational procedures followed by airlines and an international airline can fly into India with passengers, get the aircraft serviced and thereafter use it to fly passengers from India. This has been much delayed but yet a welcome move and it may help in establishing India as a preferred MRO destination.”