Civil Aviation Minister Praful Patel on Tuesday said Finance Minister P Chidambaram has agreed "in principle" to infuse more equity in Indian Airlines and Air-India to enable them expand fleet and "look into" the demand for reconsideration of withholding tax on leased aircraft.
"The finance minister has agreed in principle for equity infusion," he told reporters in New Delhi after meeting Chidambaram this morning.
Patel said he wanted equity in Air-India to be enhanced from Rs 105 crore (Rs 1.05 billion) and in Indian Airlines from Rs 153 crore (Rs 1.53 billion) as part of efforts to expand the fleet of the two airlines since low equity base was coming in the way of acquiring more aircraft.
"The final arrangement of equity infusion has to be worked out," he said.
On the issue of withholding tax on leasing of aircraft at the rate of 48 per cent, introduced in the Union Budget this year, Patel said he took up the issue for reconsideration and Chidambaram promised to "look into" it.
Patel said he also requested the finance minister for some share from the Rs 40,000 crore (Rs 400 billion) Infrastructure Fund, announced in the Budget, for development of small airports.
He exuded confidence that the issue of differential pricing of aviation turbine fuel, owing to different rates of sales tax in various states, would be sorted out with the introduction of VAT next year and added that he had taken up the matter with Chidambaram.