Minister of Civil Aviation and Steel Jyotiraditya Scindia Business describes itself as a facilitator to help the states and the Center achieve the common objective of development. In an interview, he told TOI that he has managed to move 16 out of 28 states to a common VAT on Aviation Turbine Fuel (ATF) without implementing it and is in talks with Maharashtra and Delhi to reduce the levy. Huh. He also says that disinvestment of steel sector PSUs and asset monetization will involve a response from each and every stakeholder. Excerpts:
How will the removal of export duty on steel items as well as ore and pellets impact the industry?
This is an area that is regulated, we believe in the market setting the price. However, when there are issues regarding prices going beyond certain norms, it has a cascading effect on the economy. Rational pricing should be ideal as finished steel is a primary product that feeds the entire economy. In May, the government imposed an export duty as steel prices hit new highs. In the next few months, we will regain some of our export market. It will be a slow growth. Internationally, the steel market is going through a very weak phase, with raw material and finished steel prices falling as demand is not there. The only ray of hope is India. Domestically, prospects are bright, driven by the government’s large capex plan, and exports top-up. About 15% of the 121 million tonnes of production is export material.
Looking at the concerns of unions, what is the way forward for asset monetization and disinvestment in steel PSUs?
We have three-four candidates – in different plants of RINL, Nagarnar or SAIL – decisions have been taken on all of them on an in-principle basis. They are in different stages. A disinvestment process is an evolving one. due to which indian water Disinvestment was a success because it was an iterative process, where you constantly kept your eyes and ears open, you were considering stakeholder concerns and crafting the story. Ultimately, it should be a win-win for all stakeholders. Whether you are an association, state governments, investors or government of India, we all have the same ultimate objective to keep this concern going and contribute to nation building. If we all agree then we have to find a way.
Why was the wide-body wet lease policy amended for Indian carriers?
In two and a half years (Covid time), most of the planes were grounded with no passengers. Suddenly from this starvation scenario, the sector changed into a frenzied scenario with revenge travel happening across the globe – something which has not been seen in at least the last 20-30 years. Aircraft that were once grounded can no longer fly high enough. There is no supply of (new) planes. Naturally, the aircraft majors had slowed down their pipelines thinking that demand would fall, when suddenly we had a flood (globally). We’re stuck in a very strange situation where we have airports and airlines that want to fly more but we can’t get enough planes. As an interim arrangement for airlines to get their fleets (as per their aircraft orders), we relaxed the wet lease environment to provide the required connectivity. I have always insisted on more wide body aircraft with Indian carriers so that we can provide point-to-point (international) connectivity as opposed to having our hubs in neighboring countries. Air India, Indigo and Vistara Have very strong and healthy fleet-acquisition programs. Other airlines are viewing this as a stopgap until they receive their aircraft. This will provide a good opportunity for growth in the immediate period till our airlines get their aircraft on dry lease or on purchase.
India’s busiest airports at Delhi and Mumbai continue to have high tax rates on ATF. What is being done to reduce the burden?
Sixteen states have come on board by reducing taxes on ATF. Today 28 out of 36 states have a 1-4% charge on ATF. You are left with eight states. This is my search with those eight states. The two big companies in that basket are Delhi and Mumbai. It is my fervent appeal and hope that they understand the multiplier effects of lowering tax rates whether they want a bigger share of the smaller pie or a smaller share of the bigger pie. There are multiplier effects both in terms of refueling and connectivity. Many states are benefiting from this where the tax on ATF has been reduced. If 28 states are charging between 1% and 4%, and eight states are charging between 20% and 30%, you as an airline know where to refuel. Earlier, airlines had no choice. Today you have a choice. The sooner they get on board (in terms of tax cuts), the better it is for them in terms of maintaining their market share of refueling.
How will the removal of export duty on steel items as well as ore and pellets impact the industry?
This is an area that is regulated, we believe in the market setting the price. However, when there are issues regarding prices going beyond certain norms, it has a cascading effect on the economy. Rational pricing should be ideal as finished steel is a primary product that feeds the entire economy. In May, the government imposed an export duty as steel prices hit new highs. In the next few months, we will regain some of our export market. It will be a slow growth. Internationally, the steel market is going through a very weak phase, with raw material and finished steel prices falling as demand is not there. The only ray of hope is India. Domestically, prospects are bright, driven by the government’s large capex plan, and exports top-up. About 15% of the 121 million tonnes of production is export material.
Looking at the concerns of unions, what is the way forward for asset monetization and disinvestment in steel PSUs?
We have three-four candidates – in different plants of RINL, Nagarnar or SAIL – decisions have been taken on all of them on an in-principle basis. They are in different stages. A disinvestment process is an evolving one. due to which indian water Disinvestment was a success because it was an iterative process, where you constantly kept your eyes and ears open, you were considering stakeholder concerns and crafting the story. Ultimately, it should be a win-win for all stakeholders. Whether you are an association, state governments, investors or government of India, we all have the same ultimate objective to keep this concern going and contribute to nation building. If we all agree then we have to find a way.
Why was the wide-body wet lease policy amended for Indian carriers?
In two and a half years (Covid time), most of the planes were grounded with no passengers. Suddenly from this starvation scenario, the sector changed into a frenzied scenario with revenge travel happening across the globe – something which has not been seen in at least the last 20-30 years. Aircraft that were once grounded can no longer fly high enough. There is no supply of (new) planes. Naturally, the aircraft majors had slowed down their pipelines thinking that demand would fall, when suddenly we had a flood (globally). We’re stuck in a very strange situation where we have airports and airlines that want to fly more but we can’t get enough planes. As an interim arrangement for airlines to get their fleets (as per their aircraft orders), we relaxed the wet lease environment to provide the required connectivity. I have always insisted on more wide body aircraft with Indian carriers so that we can provide point-to-point (international) connectivity as opposed to having our hubs in neighboring countries. Air India, Indigo and Vistara Have very strong and healthy fleet-acquisition programs. Other airlines are viewing this as a stopgap until they receive their aircraft. This will provide a good opportunity for growth in the immediate period till our airlines get their aircraft on dry lease or on purchase.
India’s busiest airports at Delhi and Mumbai continue to have high tax rates on ATF. What is being done to reduce the burden?
Sixteen states have come on board by reducing taxes on ATF. Today 28 out of 36 states have a 1-4% charge on ATF. You are left with eight states. This is my search with those eight states. The two big companies in that basket are Delhi and Mumbai. It is my fervent appeal and hope that they understand the multiplier effects of lowering tax rates whether they want a bigger share of the smaller pie or a smaller share of the bigger pie. There are multiplier effects both in terms of refueling and connectivity. Many states are benefiting from this where the tax on ATF has been reduced. If 28 states are charging between 1% and 4%, and eight states are charging between 20% and 30%, you as an airline know where to refuel. Earlier, airlines had no choice. Today you have a choice. The sooner they get on board (in terms of tax cuts), the better it is for them in terms of maintaining their market share of refueling.