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India is planning a relief package of up to $1.6bn for the aviation sector as the coronavirus (COVID-19) pandemic has affected flight demand with several countries closing borders to contain the outbreak.

The Indian Finance Ministry is currently assessing a proposal that includes deferring several taxes imposed on the sector, sources familiar with the matter told Reuters. The measures may also include enabling the airlines to pay the interest-free taxes in the next cycle.

One of the sources told the news agency: “Taxes could be deferred till the coronavirus spread is contained and the aviation sector can come back to its feet.”

The COVID-19 outbreak, which has killed more than 8,800 people worldwide, has had a significant impact on international airline operations. In the last month, several carriers reduced operations and grounded planes due to travel restrictions and decreased demand.

In India, IndiGo and Vistara are also planning to ground aircraft due to similar concerns.

According to estimates by the International Air Transport Association (IATA), airlines may need more than $200bn to recover from the crisis.

Earlier this week, the Australian Government announced a series of measures to support the aviation industry. Collectively, the steps will amount to nearly A$715m ($429m) in relief for the industry.

In the US, Boeing sought a minimum of $60bn in government funding for the aerospace manufacturing industry. The US administration has already proposed a plan to provide $50bn in secured loans to the airlines.