Killing the Golden Goose

The proverbial "last straw on the camel's back" came on January 17 this year when the Department of Customs issued a notification imposing customs duty on aircraft as well as any other equipment brought into the country for static or flying display at Aero India 2019.

January 28, 2019 By Air Marshal B.K. Pandey (Retd) By Karthik Kumar / SP Guide Pubns
The Author is Former Air Officer Commanding-in-Chief of Training Command, IAF

 

Aero India 2019 is set to be an expensive affair for overseas exhibitors as there will be no duty exemption for temporary import of aircraft and spares for static or flying display. The amended rules notified on January 17, 2019, require participants to execute a bond equal to the value of the goods along with a bank guarantee or cash deposit with 110 per cent duty payable on them. Goods being brought into the country for exhibition are normally not considered imported and do not attract customs duty as they are meant to be taken back after completion of the event. However, the customs department now expects exhibitors to make a deposit of customs duty till the goods are present in the country.

As against a peak figure of around 800 participants in an Aero India Airshow held earlier on, this year, the number of participants is less than half that figure.

Aero India Airshow is an international event of repute that has been held at Indian Air Force (IAF) Station, Yelahanka near Bengaluru, with unfailing regularity since the year 1996. However, this biennial flagship event of the nation related to aviation held every two years, has occasionally been afflicted with uncertainties. When it began, it was an Airshow that was a combination of both military and civil aviation. However, in 2008, the United Progressive Alliance government, decided that there was scope for a separate Airshow for the civil aviation sector as this segment of the industry had begun registering a rapid growth rate. Following this decision, a separate Airshow dedicated to civil aviation named as India Aviation began to be held every two years at the airport at Begumpet in Hyderabad, alternating with Aero India Airshow. However, holding a separate event for civil aviation imposed a heavy financial burden on the major global aerospace majors who are involved in the production of platforms in both military and civil aviation domain.

Static display at Aero India 2017. For the first time, customs duty is being imposed on aircraft brought in for static or flying display at Aero India 2019.

Subsequently, the name of the civil aviation Airshow was changed from India Aviation to Wings India. Understandably, the aerial display in the civil aviation Airshow was confined to mere fly past by business jets or even the larger civil aviation platforms participating and was bereft of any aerobatic display which was reserved for Aero India which had virtually became totally a military aviation Airshow. Now after a decade, there is rethink on the subject and there is a strong opinion in favour of reverting to the old practice of organising a single biennial Airshow that would combine both military and civil segments of aviation. It will certainly be a relief for the participants especially the major global aerospace majors as it would significantly reduce their financial burden.

The organisers as well as the participants of Aero India were somewhat bewildered when around the middle of last year, reports appeared in the media that the venue of Aero India Airshow was likely to be shifted to IAF Station Bakshi ka Talaab near Lucknow in Uttar Pradesh. Apparently, this was at the behest of Yogi Adityanath, the Chief Minister of Uttar Pradesh who had appealed to the Minister of Defence, Nirmala Sitharaman, to allow his state to host the event. Also, there was another worrisome speculation that the time line for the Airshow could be advanced to sometime in November 2018 instead of February 2019. These newsbreaks must have generated a feeling of both anxiety and dismay amongst not only the participants from abroad, but from the large number of the companies in the aerospace hubs located in the cities in South India, particularly in and around Bengaluru. Fortunately, the matter was reconsidered and in the first week of September last year, the Ministry of Defence made an announcement that Aero India 2019 would be held in Bengaluru in February 2019, ending speculation about any change in the venue for the Airshow. This decision of the government came as an immense relief for all those connected with the Airshow. Hopefully, Aero India Airshow is not confronted with such a traumatising experience in the future.

The proverbial “last straw on the camel’s back” came on January 17 this year when the Department of Customs issued a notification imposing customs duty on aircraft as well as any other equipment brought into the country for static or flying display at Aero India 2019. Although the customs duty paid is refundable when the aircraft or equipment is moved out of the country after the Airshow, the recent notification actually translates to heavy and unproductive investment for the companies involved and the frustrating hassles they may have to go through in claiming refund after the event. The participating companies already pay exorbitant charges for registration, booking of space to set up their pavilions, chalets and other facilities resulting in very heavy financial burden. The imposition of customs duty for participants from abroad in Aero India 2019 at the last minute, is somewhat odd as all exhibitors in the previous four editions of Aero India Airshow had been exempted from this unwarranted financial burden. Also, exemption of customs duty is a practice followed for all major Airshows around the world.

As against a peak figure of around 800 participants in an Aero India Airshow held earlier on, this year, the number of participants is less than half that figure. This latest move by the government related to customs duty will certainly not be inspiring especially for the new participants.