At present, there is no tax or duty on import of aircraft, aircraft engines and spare parts but the same will be taxed under GST.
Indian carriers are expected to add about 100 planes to their fleet in next 3-4 years and the impact of taxation on them could be huge once GST is implemented.
Also making things tougher for the sector government has proposed 100% FDI in aviation.
Indigo & Spicejet have raised “security” concerns to allow 100% foreign ownership by non-airline players in the Indian carriers.
Interglobe aviation is down by almost 31.94% over one year period. Spicejet on other hand is down by almost 22.88% over same period and Jet Airways is down by almost 49.97%.
Investors may take caution before taking exposure to the sector.