CA Kamal Garg
The Civil Aviation sector includes Airports, Scheduled and Non-Scheduled domestic passenger airlines, Helicopter services/Seaplane services, Ground Handling Services, Maintenance and Repair organizations; Flying training institutes; and Technical training institutions.
For the purposes of the Civil Aviation sector:
(i) “Airport” means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and passenger facilities and includes aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934;
(ii) “Aerodrome” means any definite or limited ground or water area intended to be used, either wholly or in part, for the landing or departure of aircraft, and includes all buildings, sheds, vessels, piers and other structures thereon or pertaining thereto;
(iii) “Air transport service” means a service for the transport by air of persons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights;
(v) “Air Transport Undertaking” means an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward;
(v) “Aircraft component” means any part, the soundness and correct functioning of which, when fitted to an aircraft, is essential to the continued airworthiness or safety of the aircraft and includes any item of equipment;
(vi) “Helicopter” means a heavier-than -air aircraft supported in flight by the reactions of the air on one or more power driven rotors on substantially vertical axis;
(vii) “Scheduled air transport service”, means an air transport service undertaken between the same two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognizably systematic series, each flight being open to use by members of the public;
(viii) “Non-Scheduled Air Transport service” means any service which is not a scheduled air transport service and will include Chartered and Cargo airlines;
(ix) Chartered” and “Cargo” airlines would mean such airlines which meet the conditions as given in the Civil Aviation Requirements issued by the Ministry of Civil Aviation;
(x) “Seaplane” means an aeroplane capable normally of taking off from and alighting solely on water;
(xi) “Ground Handling” means (i) ramp handling , (ii) traffic handling both of which shall include the activities as specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time, and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic handling.
The Reserve Bank of India vide its Circular A.P. (DIR SERIES 2011-12) CIRCULAR NO. 113, DATED 24-4-2012, stated as follows:
1. As per the extant guidelines, availing of ECB for working capital is not a permissible end-use. It now has been decided to allow ECB for working capital as a permissible end-use for the civil aviation sector, under the approval route, subject to the following conditions:
(i) Airline companies registered under the Companies Act, 1956 and possessing scheduled operator permit license from DGCA for passenger transportation are eligible to avail of ECB for working capital;
(ii) ECB will be allowed to the airline companies based on the cash flow, foreign exchange earnings and its capability to service the debt;
(iii) The ECB for working capital should be raised within 12 months from the date of issue of the circular;
(iv) The ECB can be raised with a minimum average maturity period of three years; and
(v) The overall ECB ceiling for the entire civil aviation sector would be USD one billion and the maximum permissible ECB that can be availed by an individual airline company will be USD 300 million. This limit can be utilized for working capital as well as refinancing of the outstanding working capital Rupee loan(s) availed of from the domestic banking system. Airline companies desirous of availing of such ECBs for refinancing their working capital Rupee loans may submit the necessary certification from the domestic lender/s regarding the outstanding Rupee loan/s.
2. ECB availed for working capital/refinancing of working capital as above will not be allowed to be rolled over.
3. The application for such ECB should be accompanied by a certificate from a chartered accountant confirming the requirement of the working capital loan and the projected foreign exchange cash flows/earnings which would be used for servicing the loan. Authorised Dealer should ensure that the foreign exchange for repayment of ECB is not accessed from Indian markets and the liability is extinguished only out of the foreign exchange earnings of the borrowing company.
4. The modifications to the ECB policy will come into force from the date of this circular. All other aspects of the ECB policy shall remain unchanged
The above liberalisation has been consequent upon to a review of the policy related to ECB and keeping in view the announcement made in the Union Budget for the Year 2012-13.
Compiled by FCA Kamal Garg. He is the member of ICAI. He is engaged in IFRS – Audit and Advisory, FEMA, Valuation and XBRL Services. He can be approached at firstname.lastname@example.org