NEW DELHI: The Indian Finance Ministry is considering a rescue package worth as much as $1.6 billion for the aviation sector, which has been hit hard after the coronavirus outbreak forced countries to close borders and brought air travel to a near-halt. The proposal will include temporary suspension of most taxes levied on the sector.
“Taxes could be deferred till the coronavirus spread is contained and the aviation sector can come back to its feet,” one of the sources said, adding that the companies could be permitted to pay the taxes interest-free in the next tax cycle.
The coronavirus has infected over 200,000 people and caused nearly 8,500 deaths in 164 nations, triggering emergency lockdowns and injections of cash unseen since World War Two. More than 150 people have been infected and three have died in India.
Governments of the world over are scrambling to rescue airlines that have been forced to park planes and cut jobs as the virus puts the brakes on travel. Airlines may need a bailout of more than $200 billion, the International Air Transport Association (IATA) estimates. The Trump administration, earlier on Wednesday, sought approval from Congress for $50 billion in secured loans to U.S. airlines to address the financial impact during the crisis.
Airlines such as IndiGo, Vistara, budget carrier GoAir have suspended their international operations.
Global aviation consultancy CAPA estimates that Indian airlines, excluding state carrier Air India, will report losses of up to $600 million for the January-March quarter, which could worsen if demand continues to fall.
“In the absence of serious and meaningful government intervention, such an outcome could lead to several Indian airlines shutting down operations by May or June due to a lack of cash,” CAPA said in its March 18 report.