Liberalised FDI norms have the potential to put the aviation sector on the growth track but taxation issues are major impediments for the industry, a survey has found.

The industry termed formation of a Civil Aviation Authority a crucial step for development of Indian civil aviation sector, but said poor infrastructure at airports, land acquisition and environmental clearance were major roadblocks impeding the development of low cost airports in tier II and tier III cities, a survey by FICCI-EY on Civil Aviation said.

Even as a majority of stakeholders in the aviation industry hold the easing of foreign idirect investment (FDI) norms would bring in capital and expertise for the domestic sector, developing Indian airports as air traffic hubs would largely depend on the terms of agreement between foreign airlines and Indian carriers, reveals a survey.

As many as 90 per cent of those surveyed by industry body Federation of Indian Chambers of Commerce and Industry in association with EY, say the government has a critical role to ensure that Indian airlines have a level-playing field in bilateral arrangements so that an unduly large share of air traffic is not taken away by foreign carriers.

While 59 per cent of the respondents feel recent policy initiatives such as allowing direct import of aviation turbine fuel (ATF), abolition of the aircraft acquisition committee (AAC), permitting flexi use of military and civil airspace and development of airports in tier-II and tier-III cities to boost regional connectivity are “positive measures”, implementation of these programmes would be key for growth.

However, 57 per cent of those surveyed say high taxation, lack of access to finance, shortage of trained manpower, rise in fuel costs, infrastructural bottlenecks, high operating costs are major deterrents in growth of the aviation industry.

The development of low-cost airports is taking place at a slow pace due to delays in the land acquisition process and in securing environmental clearances. This adds to project costs and affects “financial viability”, say 49 per cent of respondents.

As regards development of air cargo and ground-handling industries, 64 per cent say while opportunities exist, poor infrastructure, lack of adequate warehousing facilities, delayed policy implementation, slow export-import procedures, restricted customs working hours are severely affecting business potential in these areas.

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