India’s Business Aviation Sector Urges Shift From Import Duties To Operations Tax To Boost Growth

India’s business aviation sector has renewed its call for policy reforms, urging the government to replace high import duties on aircraft with a more practical, operations-based taxation model. The sector argues that the current import tax regime is not only stifling growth but also creating inefficiencies that compromise competitiveness and safety.

Distorted Market Due to High Import Duties

At present, business aircraft owners are compelled to register as Non-Scheduled Operator Permit (NSOP) holders simply to avoid heavy import duties. This has led to distorted charter pricing, with rates based on cost recovery rather than market dynamics, making it hard for genuine commercial operators to survive. India also lacks a clear structure for aircraft management companies or owner-operator models—both of which are standard in developed countries. Consequently, 122 NSOPs manage just 400 aircraft, causing operational fragmentation and a strain on regulatory oversight.

Missed Opportunity for Fractional Ownership and Fleet Growth

Innovative models like fractional ownership have failed to take off due to these tax-related hurdles. Although such models are in high demand globally, they remain unfeasible in India without tax parity. Meanwhile, demand for business jets continues to far exceed supply. Despite having over 250 billionaires, India has only 200 business jets, compared to the US’s 15,000 for 600 billionaires. This imbalance also undermines regional connectivity, as small aircraft, crucial for linking underserved areas, remain underrepresented.

A Practical Proposal: Shift Tax Focus to Aircraft Operations

The proposal calls for eliminating import duties entirely, a move last implemented in 2007 and still common in developed economies. Instead, it suggests taxing business aviation based on actual usage. Public service flights—including medical, religious, and emergency services—as well as flights to unserved airports, should be exempt. Flights to well-connected areas for luxury or convenience could carry a higher operational tax, possibly above the current GST rate.

Economic Impact and Growth Potential

This shift could unlock substantial economic potential. A 2016 report by the Business Aircraft Operators Association (BAOA) and Martin Consulting estimated that if current restrictions persist, India could lose over ₹1,700 crore annually in direct GDP contribution by 2030. This figure excludes the sector’s indirect and induced contributions.

In conclusion, the proposed tax reform provides a win-win solution—ensuring continued government revenue while fostering business aviation growth. By enabling efficient ownership models and reducing regulatory burden, the sector can become a key driver of regional development and economic progress. The Finance Ministry now has a viable alternative that balances fiscal prudence with forward-looking industry support.

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