The government is likely to impose a cess on air travel to raise funds to finance the ambitious Rs 40,000 crore airports modernisation project.

If it happens, every international passenger will be taxed Rs 200 for each trip and domestic passengers will be taxed Rs 100 a trip.

As per the government's estimates, this exercise is expected to raise over Rs 750 crore next year. A proposal to this effect had been mooted at a meeting of the Prime Minister's committee on infrastructure, held earlier this month.

This move by the government is a modification of its earlier plan to impose a cess of Rs 500 on every passenger landing at any of the new airports.

However, this proposal was rejected as experts felt that such a move could make passengers avoid the new airports as airlines are now offering fares as low as Rs 500.

The government, earlier this month, had decided to raise up to Rs 40,000 crore by 2010 from various sources, including internal accruals of the Airports Authority of India, external borrowings and from its private sector partners.

While developing the airports, the government is expected to follow a hybrid model with certain airports being developed completely in the public sector, while others will be developed in partnership with the private sector. So far, private participation is permitted for Delhi and Mumbai airports.

The government is expected to open airports across the country other than those in the Northeast to the private sector. All the 80 operational airports managed by the AAI will be upgraded in phases.

In the first phase, about 25 airports, which account for the entire international travel from India, will be raised to global standards. Besides, the government also plans to develop about six greenfield airports across the country with an investment of over Rs 6,000 crore.