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

India’s business aviation sector, comprising private jets and small aircraft, holds immense potential but is currently constrained by heavy taxation and complex regulations.

A new report, ‘Unlocking Growth: Proposing Alternative Tax Revenue Solution to Help Grow India’s Business Aviation Sector’, recommends a use-based tax system in place of the current import-heavy model to support sectoral growth without hurting government revenues.

Existing Challenges In Taxation

Under the current system, private jets and aircraft operated under Non-Scheduled Operator Permits (NSOP) attract high import duties.

This leads many to set up NSOPs not for commercial intent but simply to reduce the tax burden.

Consequently, charter prices are often driven by cost recovery rather than market demand.

Moreover, there’s a lack of clarity between aircraft ownership and operational rights, often requiring a separate NSOP for each aircraft, which is inefficient.

Missed Opportunities: Fractional Ownership & More

High import taxes have also hindered the introduction of innovative models like fractional ownership, where multiple stakeholders co-own an aircraft and share its use.

Common in Western markets, such models are difficult to implement in India.

Despite having over 250 billionaires, India has just 200 business jets, compared to 15,000 in the US, which has around 600 billionaires.

The underutilisation of small aircraft has also affected regional air connectivity.

Importance Of Small Aircraft

Small aircraft are vital for regional connectivity and economic development. For instance, air services in towns like Raigarh have spurred tourism, industrial growth, and emergency services.

However, business aviation is still largely perceived as a luxury, which has limited its expansion.

Currently, India has only around 550 small aircraft and helicopters, compared to 750 commercial airliners.

In contrast, the US maintains a balanced aviation pyramid, with general aviation forming a strong base.

Proposal: Shift To Use-Based Taxation

The report advocates removing import duties entirely, as done in 2007 and adopted in many developed countries, and introducing a system based on aircraft usage.

Private and luxury use flights would attract tax, while public-service-related flights—such as medical evacuations, religious pilgrimages, or emergency services—would be exempt.

Tiered Tax Rates Based On Airports

The proposed model suggests different tax slabs based on airport usage:

• Unserved airports (no regular flights): Full tax exemption.
• Under-served airports (limited flights): Lower tax rates.
• Well-served airports (multiple scheduled flights): Higher tax rates.

Advantages Of The Proposed System

This model could foster new ownership structures like fractional ownership and enable clearer roles between owners and operators.

It would also reduce administrative burden by lowering the need for multiple NSOPs and addressing the shortage of aviation professionals.

Most importantly, it would likely increase the number of business jets and helicopters, improving connectivity and stimulating economic activity.

If implemented, the new system could mark a transformative shift for Indian business aviation, positioning it as a driver of national growth rather than a luxury niche.

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About The Author

Col Sanjay Julka is the CEO of Club One Air and a seasoned aviation professional with 38 years of combined experience in the Indian Armed Forces and the business aviation sector.

A former pilot, he has led two leading charter airlines and holds an MSc in Defence Studies.

Col Julka is an influential voice in the industry, regularly participating in key seminars, air shows, and aviation forums both in India and internationally.

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