New Delhi, Jan 30 (IANS): Industry lobby PHD Chamber Friday urged state governments to reduce value added tax (VAT) on jet fuel to increase connectivity and passenger traffic.

The recommended cut in VAT on jet fuel from the average rate of 22 percent to less than five percent was made as part of PHD Chamber-GMR Aviation Summit 2015 which was held here.

The white paper released on the occasion on "Developing Regional and Remote Connectivity" by senior government functionaries and industry representatives demanded that lowering taxes on ATF (air turbine fuel) would fuel connectivity to regional air and cargo hubs.

The industry lobby cited the increase in aviation activity in Chhattisgarh after the state reduced the VAT on ATF from 20 percent to four percent.

The connectivity and air traffic also increased substantially in states such as Goa, Madhya Pradesh and Jharkhand as these states curtailed VAT on ATF.

"Therefore, other states should follow suit for which the central government can undertake persuasive initiatives and efforts," said Gopal Jiwarajka, vice president, PHD Chamber.

The chamber's chairman of civil aviation committee K.Narayana Rao said that all stakeholders in the sector, such as the central and state governments, airports, regional airlines, need to work together on the issue of regional and remote air connectivity.