To facilitate the privatisation and modernisation of the 50-odd non-metro airports across the country, the government is likely to spin off each of these into a separate company which will help it forge commercial arrangements and joint ventures with private parties.
Besides, private sector partners in the projects would be given special fiscal incentives including a hundred per cent deduction in income tax for the first five years and a 30 per cent deduction for the next five years.
It is also proposed that such incentives should be made available not only to private companies investing in airport infrastructure but also to the Airports Authority of India and existing agencies investing in upgradation of existing airport infrastructure.
While the private sector companies will be managing the airports and offer airport services, AAI will provide the air traffic control services in these airports.
This move comes at a time when the government is planning to modernise about 50 airports in the country through public-private participation and upgrade the airport infrastructure in the country at a cost of about Rs 40,000 crore (Rs 400 billion).
It may be recalled that the government is currently in the process of privatising Delhi and Mumbai airports. Sources also said that the government may put in some conditions including a minimum lock-in period for the investors.
Besides, the government is also expected to finalise certain criterion for awarding the contract to the private sector companies including security clearance.
In addition the government is also expected to insist that Airports Authority of India, which will have a board position in the venture, will be an active partner.
In key decisions, approval of the AAI representative on the board will be mandatory.
Besides, to protect the business interest of the airport operator, the government will give the first right of refusal to be part of any green-field airport coming up near these airports, to the private sector partner in the venture.
The government is also planning a similar process for the companies bagging the Delhi and Mumbai airports.
Flying high with sops