HIGH-FLIER

Mumbai, June 30: The Reserve Bank of India has liberalised import rules for the civil aviation sector and allowed airlines to make advance payment up to $50 million for buying aircraft, helicopters and other aviation equipment.

Airlines operating scheduled air transport services can now make “advance remittance, without bank guarantee or an unconditional, irrevocable standby letter of credit, up to $50 million, for direct import of each aircraft/helicopter/other aviation related purchases,” an RBI notification said.

The central bank has also asked authorised dealer banks to undertake such transactions after following the know-your-customer guidelines with respect to the local importer and the overseas manufacturer.

Earlier, banks were allowed to make an advance payment up to $1 million without any guarantee for import of goods and there were no separate guidelines for the aviation sector.

The notification also said the advance payment should be made according to the terms of the contract between the buyer and the seller in the account of the manufacturer. The RBI’s decision will help airlines, approved by the director general of civil aviation, in acquiring aircraft and other civil aviation equipment.

Many private sector airlines, including Kingfisher Airlines, Air Deccan and Paramount Airways, have drawn up extensive plans to acquire aircraft to meet the growing requirement of the civil aviation sector.

Kingfisher Airlines recently signed a deal with Airbus Industrie to buy 50 aircraft for $7.3 billion. This is the largest order by a private Indian carrier. Under the agreement, Kingfisher Airlines will buy five A340-500s, 15 A350-800 XWBs (extended wide-bodied), 10 A330-200s and 20 planes from the A320 family, including A318, A319, A320 and A321.