Union Budget 2012: Bonanza for the aviation industry

The Union Budget 2012 has provided a much needed relief for the aviation sector. External Commercial Borrowings have been permitted for working capital requirements to the tune of $1 billion.

The industry has also received custom duty exemption for imports of certain parts, testing equipment for maintenance, repair, and operations services.

One setback is the increase in the service tax for the sector. It remains to be seen whether this will be passed on to consumers.

Over the last few years the aviation industry has been adversely affected by rising aviation turbine fuel, which remains amongst the highest in the world. The industry has often been hankering for tax breaks and reliefs as most of the major airlines are saddled with huge debts and mounting losses.

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