States not to prune sales tax on ATF now

NEW DELHI: Tougher times may be ahead for the country’s air carriers as States on Saturday refused to prune their rates of sales tax on aviation turbine fuel (ATF), a commodity which alone accounts for more than 40 per cent of the total operational cost of airlines.

According to VAT (value added tax) panel Chairman and West Bengal Finance Minister Asim Dasgupta, the States also rejected the aviation industry’s demand to bring ATF under the ‘declared goods’ category mainly because no State government would then be able to levy more than four per cent sales tax on the jet fuel.

At present, the sales tax on ATF differs widely from State to State, ranging from a low of four per cent in Andhra Pradesh to a high of anything between 20 per cent and 30 per cent in several other States.

Speaking to the media after the VAT panel’s meeting on Goods and Services Tax (GST) here, Dr. Dasgupta said: “The mood of States is not to review the [sales tax] rates of ATF now, because we asked some hard data on policy of fixation of pricing of petroleum products. We have not got the response [from the Centre].” In particular, the panel had sought to know from the Centre certain aspects such as how ATF prices are fixed, the share of the fuel in the total operational costs of airlines and the like.

However, having received no response so far, Dr. Dasgupta said that the “consensus of the Empowered Committee of State Finance Ministers is that we do not want this [ATF] to be brought in the declared goods list” and this decision will be conveyed to the Centre “accordingly, duly, [and] appropriately”.

Incidentally, the stand taken by the State finance ministers at the VAT panel meeting on the issue of sales tax rate on ATF has come almost ten days after the setting up of a ministerial group to examine the impact of jet fuel prices on the airlines and suggest measures to cut the operational costs.

As of now, products that are of importance in inter-State trade or commerce are brought under the category of ‘declared goods’ and the list now includes items such as paddy, rice and other foodgrains, coal, cotton, iron and steel and LPG among fuel products. As for ATF, the fuel enjoys declared goods status when utilised for turbo-prop aircraft meant for short-haul.

Among other factors, high ATF prices owing to the steep sales tax levied on the fuel by various State governments is one of the prime afflictions of the aviation sector, especially because the share of ATF in the operational cost of airlines is much higher than the global average of 20-25 per cent.

While the average price of ATF in the entire Asian region as also London and New York is pegged at about Rs. 24,000-26,000 a kilolitre, its price in Andhra Pradesh stands at about Rs. 34,000-35,000 a kilolitre.

NIFT speciality centre in Coimbatore

COIMBATORE: The Union Government will establish a National Institute of Fashion Technology (NIFT) speciality centre in Coimbatore, Union Minister for Textiles Dayanidhi Maran said here on Saturday.

Inaugurating the modernised facilities of four mills of National Textile Corporation (NTC) he said the speciality centre would be established in association with the State Government. The resources of NTC and NIFT would be pooled for the benefit of the textile units in this region. NTC would give seven acres of its surplus land to set up the centre and would host the Centre for Apparel and Textiles Studies. The speciality centre would cater to the needs of the local textile industry by providing design, technology and management inputs.

The NTC had modernised the four mills at a cost of Rs. 76.50 crore. Already two NTC mills here were modernised. He urged the NTC to modernise its retail outlets too to revive sales. A technical textiles manufacturing facility would be established in one of the NTC units here. The NTC would make a study on the potential of various technical textile products and soon prepare a project report, he said.

Union Minister of State for Textiles Panabaaka Lakshmi said the Ministry was organising seminars to create awareness on technical textiles. The modernised NTC mills would produce value-added products for domestic and export markets.

Secretary, Union Ministry of Textiles, Rita Menon, said that in an effort to help the NTC market its products, the Textile Ministry was trying to see if the corporation could supply to the Railways and for the commonwealth games.

Earlier, speaking at the platinum jubilee celebrations of the Southern India Mills’ Association here, the Minister said a solution would be found soon to the pollution problem of the textile units in Tirupur.

The Ministry had received representations from the stakeholders about the duty drawback rates and the need for measures to improve the export competitiveness of the Indian textile units. The Textile Ministry had discussed these with the Department of Commerce. “I hope these issues will be addressed in the Foreign Trade Policy to be announced next week,” he said.

India, South Africa agree on road map to enhance trade ties

NEW DELHI: Union Commerce and Industry Minister Anand Sharma on Saturday called on South African President Jacob Zuma in Pretoria and pledged to expand and diversify trade ties with the African nation to give a new dynamic dimension in the coming years.

Mr. Sharma, who is on an official visit to South Africa from August 20 to 24, conveyed the greetings of the Indian leadership to Mr. Zuma and congratulated the African National Congress on its resounding victory in the elections under his leadership. Mr. Zuma also conveyed his felicitations to Prime Minister Manmohan Singh and UPA Chairperson Sonia Gandhi on their success in the Indian elections and described the successful elections in both countries as a step towards strengthening democracy worldwide.

Both sides agreed on a roadmap to enhance bilateral cooperation in several key sectors, including cooperation on security issues and in addressing international terrorism. Mr. Sharma reiterated that the Indian leadership was looking forward to the visit by President Zuma to India early next year, which would give an added impetus to the relationship.

Both Mr. Zuma and Mr. Sharma also discussed measures to deepen and diversify the bilateral relationship through a newly energised economic and commercial partnership building on the existing complementarities. Mr. Sharma briefed the South African President on efforts by the Ministries of Trade and Industry on both sides to enhance the quality of business-to-business interaction through an interaction between CEOs in connection with his visit. It was agreed that India would share its experience in rural development and employment generation and a delegation led by the Minister of Rural Development of South Africa would visit India in the near future in this regard.

India’s initiative

They also emphasised the need for both countries to work together to address contemporary global challenges, including the economic crisis and the need to make international political and economic institutions more democratic and representative of contemporary realities of the 21st Century. He also informed Mr. Zuma on India’s initiative to host a Ministerial meeting in New Delhi on re-energising the Doha Development Round of WTO at which the South African Trade and Industry Minister would also take part. Mr. Sharma later met Maite E. Nkoana-Mashobane, Minister for International Relations and Cooperation of South Africa. He also called on the Deputy President of South Africa, Kgalema Motlanthe, on Friday. He also addressed a meeting of the India Business Forum in Johannesburg. He will hold bilateral meetings with his counterpart, Minister of Trade and Industry, Rob Davies, on August 24.