The new civil aviation policy is expected to be finalised early next financial year with the government still working on certain issues including those related to the 5/20 international flying norm.
The draft policy was unveiled in October last year and after extensive consultations with various stakeholders, some issues are still being sorted out.
Civil Aviation Secretary R N Choubey said the ministry plans to finalise the Cabinet note for the policy by the end of this month after sorting out certain issues.
The policy was expected to be finalised in the current financial year as certain proposals were to be implemented from April 1, 2016.
Speaking on the sidelines of the India Aviation-2016 event here, he said as many as 15 variations are being looked at with respect to the 5/20 rule.
Under the norm, only those airlines having at least five years of domestic flying experience and a minimum of 20 aircraft are allowed to fly overseas.
A tussle has ensued between established carriers and startup airlines over the 5/20 norm with the latter seeking scrapping of it.
While startup carriers Vistara and AirAsia India, where Tatas is a stakeholder, are demanding that the rule be done away with, the grouping of four private Indian carriers comprising IndiGo, SpiceJet, Jet Airways and GoAir wants the rule to continue.
The proposed policy seeks to boost the Indian aviation sector, which has high growth potential, and to strengthen regional connectivity.
It has suggested tax incentives for airlines, maintenance and repair works of aircrafts besides mooting 2 per cent levy on all air tickets to fund regional connectivity scheme.
Another significant proposal is for having 50% Foreign Direct Investment (FDI) in domestic carriers in case the open skies policy is implemented.
Under open skies policy, overseas airlines can operate an unlimited number of flights into and out of India. At present FDI limit is 49%.
Other proposed measures include setting up of no-frills airports and providing viability gap funding for airlines to bolster regional air connectivity.
To make MRO (Maintenance Repair, Overhaul) cheaper, the government has proposed to exempt such activities from service tax net and not levy any VAT.