associate sponsors


IAF fears slowdown in modernisation after Customs Act change

New Delhi: The Indian Air Force has asked the defence ministry to find a way out in the wake of a recent amendment in the Customs Act removing blanket duty exemption for defence goods, a move that may delay modernisation and maintenance programmes of fighter planes like Mirage and Jaguar.

Indian Air Force. Reuters

Indian Air Force. Reuters

Under the new rules, which came into effect from 1 April, customs duty exemption has been given to specific projects, all of which are in production in the country.

However, components and spare parts for Mirage, Jaguar and MiGs combat aircraft have been left out of the list of
exempted goods.

IAF came to know about the new changes only in the first week of April, defence sources said, adding that various
imported spare parts and components, worth several millions of euros, are now lying at various ports.

"This is not something which affects IAF alone. It affects other two Services also," an official said, adding that since it is a new rule, clarifications have been sought.

Defence experts say that if the matter is not resolved soon, at least 20 percent of the Mirage fleet, which is being modernised under a multi-million euro deal with France, will be grounded.

Sources said the "thinking" behind the move to give duty exemption in project-specific cases was to ensure that the
domestic industry thrives.

"It is clear that someone missed a few points as genuine shipments are stuck," a source said.

Under the agreements that have been signed, the country exporting the spare parts and equipment takes care of the
duties sand taxes in that country while the importer takes care of the same in the country.

Till last year, aircraft, aircraft parts, aircraft engines and aircraft engine parts, along with others were exempted under Section 93 (C) of the Customs Act if they were imported by Central and state governments, contractors to them or PSUs and the sub contractors of such PSUs.

"Nowhere in the world there are duties and taxes on military goods. It is hoped that the issue would be resolved
soon," the source said.


Updated Date: May 08, 2016 15:24 PM

Also Watch

Firstpost Poetry Project: Aashna Iyer presents '7 Minutes'
  • Friday, June 15, 2018 FIFA World Cup 2018: A journey through the football Mecca of Kerala
  • Saturday, June 16, 2018 Social Media Star: Masaba Gupta, Pooja Dhingra discuss WhatsApp groups, unfollowing people and stalking profiles
  • Thursday, June 21, 2018 I Breathe: Natasha Noel's spoken word poetry on Yoga
  • Monday, June 4, 2018 It's A Wrap: Bhavesh Joshi Superhero makers Anurag Kashyap, Vikramaditya Motwane in conversation with Parul Sharma

Also See

{if $hideJSforEU != 'yes'} {/if}