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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.

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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.