Noida’s Jewar airport to have an edge over Delhi’s IGI? Aviation Ministry asks Delhi CM Rekha Gupta to cut VAT on ATF or risk flight diversion

The new airport at Jewar, Uttar Pradesh, located close to Greater Noida and southeast of Delhi, will function the capital’s second aviation hub. (Concept picture)

Noida’s Jewar Airport to have an edge over Delhi’s IGI airport? The civil aviation minister Rammohan Naidu Kinjarapu has requested Delhi’s new chief minister Rekha Gupta to decrease the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from the present 25% to between 1-4%, citing issues about attainable flight diversions to the upcoming Greater Noida airport, which is able to provide extra aggressive gas pricing.
According to the letter examined by ET, the minister mentioned: “Delhi continues to be one of the few states/UTs with a high VAT on ATF, which needs to be rationalised.”
For Indian airways, gas bills represent roughly 40-45% of their operational prices.
The new airport at Jewar, Uttar Pradesh, located close to Greater Noida and southeast of Delhi, will function the capital’s second aviation hub. Its location might appeal to passengers from Delhi’s jap suburbs and neighbouring townships. Commercial operations are scheduled to start this 12 months. The 1% VAT on ATF makes it an enticing refuelling vacation spot for plane, elevating issues for the GMR-managed Delhi airport.

Fear of enterprise loss

In his correspondence dated March 19, the minister highlighted that Uttar Pradesh’s decrease 1% VAT might encourage airways to shift from Indira Gandhi International Airport to the Jewar airport facility. “This will impact Delhi airport due to the prohibitive cost difference of ATF,” Kinjarapu famous.
Delhi’s Indira Gandhi International Airport leads India in passenger visitors, serving 73.6 million passengers in FY24, with worldwide travellers accounting for 19 million – displaying a 24% development from the earlier 12 months.
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Reducing VAT is taken into account essential for sustaining IGIA’s aggressive edge and supporting its contribution to tourism, commerce, and employment sectors.
States throughout India apply various VAT charges on ATF, starting from 0 to 29%.
“The high VAT in Delhi significantly impacts airline operations and cost structures, making fuel one of the biggest expenses for carriers,” mentioned an business government.
Airlines, together with IndiGo and Air India, have constantly requested authorities motion relating to VAT and gas bills.
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“A reduction in VAT will have a direct impact on operational expenses, allowing airlines to offer more competitive fares and expand their networks,” mentioned a prime airline government, requesting anonymity.
With ongoing Middle East tensions, ATF costs have elevated. IOCL information from March 1, 2025, signifies Delhi ATF prices ₹95,311 per kilolitre for home flights and $848.32 per kilolitre for home airways working internationally.
Assocham advocates for VAT discount to protect Delhi’s financial actions. “If airlines find a more cost-effective alternative, there is a risk that flights and related business activities may shift away from Delhi, impacting jobs and the local economy,” a supply mentioned. The aviation business awaits Delhi authorities’s resolution.
VAT on ATF stays beneath state jurisdiction. A Rajya Sabha response dated March 24 confirms 28 states/UTs implement ATF VAT at 5% or beneath.
“This will impact Delhi airport due to prohibitive cost differences, making it uncompetitive and affecting ATF sales and government revenue. Considering Delhi is one of the busiest airports in the country, I urge the Delhi government to reduce VAT on ATF to 1-4% to boost air travel and its economic benefits,” the minister mentioned.
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