Budget 2021: Govt in no mood to delay Air India sale beyond 2022

Finance Minister Nirmala Sitharaman informed that the disinvestment of Air India and Pawan Hans would be completed in 2021-22.

Budget 2021: Govt in no mood to delay Air India sale beyond 2022
Union Finance Minister Nirmala Sitharaman. Image courtesy: Twitter

Finance Minister Nirmala Sitharaman in her Union Budget 2021 on Monday (February 1) said that the government has decided to give a final push to the disinvestment of the cash-strapped national carrier Air India in the fiscal year 2021-22. 

The government has also allocated Rs 2,268 crore for a special purpose vehicle (SPV) and set up Air India Asset Holding Ltd as part of the financial restructuring of the airline.

The finance minister informed that the disinvestment of Air India and Pawan Hans would be completed in 2021-22.

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In the Union Budget for 2021-22, the Ministry of Civil Aviation (MoCA) has been allocated Rs 3,224 crore, which is 22% lower than the Rs 4,131 crore that was allocated for the current fiscal.

The Airports Authority of India (AAI), which works under the MoCA, owns and operates around 100 airports in India.

Tax sops for aircraft leasing in GIFT City

The finance minister also announced further tax incentives to encourage aircraft leasing in the country. Sitharaman said leasing companies setting up operations in the Gujarat International Financial Services (GIFT) City will be eligible for a tax holiday on capital gains and tax exemption for aircraft lease rentals paid to foreign lessors.

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"Tax incentives are a good step to build helicopters and general aviation (private and charter) segment in the country. These segments are under-penetrated as lease financing is not available. We have only around 200 helicopters in India and there is an opportunity to grow the size. With proper financial structuring it could also encourage domestic investment in the aircraft leasing business," aviation consultant Vishok Mansingh was quoted as saying by Business Standard.

Plans for Tier 2-3 airports' monetisation

Sitharaman also announced that the government will monetise state-run airports in Tier-2 and Tier-3 cities for operations and management.

"The next lot of airports is to be monetised for operations and management," said Sitharaman during her Budget speech.

The government commenced privatisation of airports in 2018.