An Aeronautics Commission: An Idea Whose Time Has Not Just Come But One

Which Is Now An Imperative

-Ishita Desai

The aviation industry, much like independent India, is young and has a promising
future. The Aviation sector (commercial) in India currently contributes $72 bn to
GDP.

The civil aviation industry in India has emerged as one of the fastest growing
industries in the country during the last two decades. India has become the third
largest domestic aviation market in the world and is expected to overtake the UK to
become the third largest air passenger market by 2024.
The Indian Government is planning to invest US$ 1.83 billion for development of
airport infrastructure along with aviation navigation services by 2026.
Yet, Indian airlines often experience huge losses, why? At the apex of the aviation
value chain are airlines. And to ensure a healthy value chain the first point of call is
an environment where airlines can thrive. For airlines the single largest pain point is
the cost of Aviation Turbine Fuel (ATF). ATF constitutes up to 40 percent of an
Indian airline’s cost base and is the largest expense item. Globally, this figure
averages roughly 20 percent.
Maintenance and repair taxation in India remains the highest globally. With an 18
percent goods and services tax (GST) levy, providers have to compete on sale price
with overseas players that only pay 5 percent — that too at cost price. This gap: 20-
22 percent.
Consequently, most airlines contract their maintenance overseas, leading to a loss of
jobs and output. Foreign airlines also do not source their maintenance from India
leading to additional loss of potential. Additionally, imposition of royalties by airports
in contravention of the National Civil Aviation Policy (NCAP) leads to MROs being
further disadvantaged. These royalties are imposed under different classifications
ranging from 11 to 30 percent.
Sadly, given this complicated structure, foreign carriers have leveraged on the MRO
potential of India while India itself lags behind. The tax policy has led to airlines
outsourcing the majority of the $1.4 billion MRO business to international providers.
That money if spent locally would spur employment and output.

And that is only about the commercial aviation sector.

IAF has created a comprehensive roadmap for rejuvenation and augmentation of its
force levels and is trying hard to steadfastly progress towards achieving the
necessary combat capabilities to transform itself into a leading modern networked
and informationised air force. Obviously, IAF’s desired capability buildup would
necessitate huge investments spanning over at least a couple of decades, opening
up market opportunities on a global scale for the manufacturers involved in military
aviation and related equipment. The IAF’s indigenisation roadmap has always talked
about setting up of defence MROs with the participation of the private sector for
sustaining the growing needs of the defence forces. The strategic needs of the
nation, financial constraints of the defence budget, unreliable delivery schedules and
escalating cost of imported supplies has necessitated widening of the array of
indigenously developed, produced and serviced spares and items. The Department
of Defence Production (DPP) and IAF through partnership with private vendors have
been investing in expanding the indigenous vendor base for supply of spares and
services. Collectively, military aviators have also been aggressively demanding for a
supportive ecosystem that helps in achieving self-reliance in aircraft maintenance.
The demands projected by the services and industry include proposals for policy
changes.
The capital intensive nature of aeronautics in India cannot be left entirely to market
forces and a deliberate way forward has to be defined for both military and civil
aircraft development and manufacture in the country.

Thus, IAF had proposed setting up a National Aeronautical Commission, an umbrella

organisation, to oversee development of capabilities and niche technology in
aviation.
It is essential to bring in a unified and well-coordinated approach with clear
objectives in aeronautical research and development,technology development and
design and manufacture of new systems

Unfortunately For a variety of reasons, this proposal has not yet been approved.

If approved, this Indian Aeronautical Commission could help boost the indigenous
aviation industry in India. A full-fledged indigenous aviation industry has many
benefits; it significantly reduces the cost of acquiring the required technology, boosts
the GDP, and so on. In order to nurture this sunrise sector in depth knowledge and
proper management is much need. And while the government has been making
efforts in the right direction, a lot more needs to be done.

This commission ,headed by NSA and all the members concerned from the three
defence services, civil aviation, leading public sector undertakings and private
entrepreneurs in the defence field, would be much more technically qualified in
aviation than any other government body.
The in-depth knowledge and management would ensure better regulation in the
sector.
The commission is better suited to attract private investors, by creating a competition
to be a part of the commission, which in turn would lead to more investments. In the
Indian context, while heavy investments are required for setting up MRO, relatively
smaller investments are required for manufacturing aircraft spares and consumable.
MRO’s require a large number of highly skilled workers; generating and creating
such a workforce requires a long gestation period. On the other hand, if negotiated
correctly, licensed production and overhaul of aircraft spares can also bring in a big
change in operating cost of aircraft in Indian aerospace. It can also nurture the
MSME sectors into participating in the aviation industry and acquiring high-end multi
use technologies. Another advantage of investing in aircraft spares and consumable
industry is that the infrastructure can be used to support military aviation as well.
Generally, the spares and consumable production industry is platform independent,
and can meet the demands of a variety of aircraft manufacturers (OEMs) like Boeing,
Airbus, Bombardier, HAL, Sukhoi, Dassault, Rafale, etc. Under these conditions of
technological similarities, it would be a win-win situation for both the military as well
as civil aviation to set up common faculties for production, repair and service of
consumables, spares and other common use airborne items.
While the entry of private enterprise into aircraft manufacture may be a very large
step, the aerospace component sector will offer the possibility of a staged growth of
complexity and scale of system integration.

The Aeronautical Commission would have a significant consumer protection role.

It could provide a mechanism for dispute resolution between aviation industry
players; administer and manage air traffic rights; and advise the Government,
administer and manage routes under public service obligations.

With the commission being an independent body, it can create its own policies
promoting indegenous manufacturers .Preferences can be accorded to indigenous
production. Import will be the second option. In case of import, the urgency of
procurement will be considered against the time that will be taken in local
development and production.

The industry stakeholders could engage and collaborate with the commission to
implement efficient and rational decisions that would boost India’s civil aviation
industry.
India has an expeditious growing aviation sector, with an even faster growing
population. A boost to the local manufacturing industry, especially for aviation, can
lead to generation of much needed employment. Consequently improving the quality
of life overall.

In conclusion, as my above arguments bring out , the requirement to have an Indian

Aeronautics Commission is not just a “desirable” anymore- but it has become an
imperative, and the faster we have it in place the better it would be for all
stakeholders.