BANGALORE: Aero India 2019 is set to be an expensive affair for exhibitors and vendors as the customs department has tweaked the conditions for availing duty exemption for temporary importation of aircraft and spare parts for static or flying display at the air show.

The amended rules, notified on January 17, require the participants to execute a bond equal to the value of the goods along with a bank guarantee or cash deposit with 110% of duty payable on them. The participants must comply with this in order to claim duty exemption of the temporary importation. Goods being brought in to the country for exhibition purpose aren’t considered imported and don’t attract customs duty as they are meant to be taken back after completion of the event. However, the customs department now expects exhibitors to cough up a deposit on a par with the duty till the time the goods are present in the country.

Also, the participants need to produce a letter of guarantee from the Federation of Indian Chambers of Commerce & Industries (FICCI).

“Although the bond and bank guarantee are fully refundable, the new conditions call for unproductive investment from the participants. At a time when the BJP-ruled Centre is on the defensive about the raging Rafale controversy, the new tariff barriers won’t help salvage India’s image,” said an aviation analyst, adding that several vendors have already raised concerns over the new customs rules.

The changed policy is expected to increase the financial burden on participants (exhibitors), particularly since the value of goods temporarily being imported is so high that vendors and exhibitors would see millions of dollars locked up in the form of cash deposits and undergo procedural rigmarole in order to claim refund

About 43 companies from across the globe are set to participate in the air show. While France will be the largest exhibitor, Rafale-manufacturer Dassault Aviation will make its presence felt with the flying display of Rafale jets and Falcon business jets. Companies from Russia and the US are expected to display products. The Airbus is among the main attractions.

As per the earlier notification issued in 2015, participants were liable to pay duty only on those goods which were not taken back after the event. The aviation turban fuel consumed was also liable for customs duty..

Customs officials, however, sought to clarify that the new amendment was not to withdraw duty exemption on temporary importation. “It is not true that customs duty will be levied on aircraft and their parts. The notification of duty exemption holds good but comes with conditions,” said AK Jyotishi, principal chief commissioner of customs, Bangalore zone.