Industry body Assocham on Monday asked the Government to lend a helping hand to troubled airlines by treating jet fuel as declared goods', which will lower local taxes on the fuel.
If a commodity is given declared-goods status, it will enjoy a significant reduction in value-added tax (VAT).
The chamber said the Indian aviation industry is adversely affected by taxation on aviation turbine fuel (ATF) as the rate varies substantially from state to state.
ATF comprises nearly one-third of an airline's operating cost, Assocham said.
The fuel should also be brought under the proposed goods and services tax, it said. Once implemented, this tax would subsume Central and State taxes like excise, customs, service tax, sales tax and VAT.
Most of the Indian airlines have accumulated huge debt on account of high operating costs. The chamber has also asked the Government to grant infrastructure status to airports.
Emergence of low-cost carriers has led to a boom in air travel and the number of passengers at Indian airports is expected to grow to 450 million by 2020, it said.
Thus, huge investments are required to develop, modernise and expand airport infrastructure. Tax holidays for initial years, concessional tariff for certain services like electricity use and moderate rates of Customs Duty, Excise Duty and sales tax will attract investments, Assocham said.
It has also asked for exemption of customs duty on imports of security systems like X-ray baggage inspection systems, explosives detectors and bomb-scanning robots.