Article Posted on : - Feb 19, 2012

SINGAPORE (PTI): The Indian government will have to lend duty-free support to the country's upcoming but fledgling aerospace industry, which has the world's highest growth potential over the next 10 years, a senior industry observer has said.

"There is an industry-wide concern about Indian customs' import duty policy, which ranges between 60 per cent and 100 per cent for bringing in spare parts and equipment for repairing and manufacturing aircraft locally," said C G Krishnadas Nair, President of the Society of Indian Aerospace Technologies & Industries (SAITI).

"It has to be zero duty for this industry," he said, highlighting the projected multi-billion dollar growth of the aviation industry, which would, conservatively, see the increase of aircraft numbers to 900-1,000 by 2020 from 526 as end of 2011.

India would become the world's "most important market" with increase in aviation services including increase of passenger traffic to 500 million people by 2020 from the 100 million in 2011.

The Indians have confirmed orders for 137 business jets in addition to the current fleet of 113 and the helicopter population in the country would triple in five years from the present 260.

Giving his views as observer of the Indian industry at the Singapore Airshow and not committing SAITI to such commercially-sensitive comments, Nair expressed concern about the growth of the new industry, saying India would lose major foreign investments in the aircraft industries if its duty structure is not changed.

"We need to have a zero duty for this upcoming industry," he stressed.

It would be challenging for the local industry and the potential foreign joint venture partners to compete with global aircraft centres if imports of spare parts, components and material were not made duty free, he opined.

Comparatively, it is duty-free to import aircraft and repair and maintenance of aircraft outside India, Nair pointed out.

Sales tax, estimated at an average of 20 per cent on locally done aircrafts and related parts and products, were the other issue, said Nair, after addressing an Indian Business Forum at the Singapore Airshow.