Indian Aviation, flying high

A rising proportion of middle-income households, healthy competition

amongst Low-Cost Carriers, infrastructure build up at leading airports
and supportive policy framework has given a positive push to the
aviation sector
In 2010, 79 MN people travelled to/from/or within India. By 2017 that doubled to 158 MN, and
this number is expected to reach 520 MN by 2037. With the air passenger traffic projected to
increase, the Indian aviation industry is on a high-growth path. To satisfy the current and
projected rise in demand for commercial air travel, Indian airlines have placed large orders for
aircraft. The nation’s airplane fleet is projected to quadruple in size to approximately 2500
airplanes by 2038.
Currently, the country has 131 operational airports including 29 international, 92 domestic, and
10 custom airports. To meet the growing demand for air travel in India, it has become imperative
to increase the capacity of airport infrastructure. In last 8 years, the number of airports has gone
up from 74 to 141 (including helipads and waterdromes) and the number is likely to cross 200 in
next 4-5 years. The government of India expects to invest $1.83 bn in the development of airport
infrastructure by 2026. The sector has huge impact with economic multiplier of 3.1 and
employment multiplier of 6.
The Indian Civil Aviation MRO market, at present, stands at around $900 MN and is anticipated
to grow to $4.33 bn by 2025 increasing at a CAGR of about 14-15%. The Indian drone industry
will have a total turnover of up to $1.8 bn by 2026. 
Up to 100% FDI is permitted in Non-scheduled air transport services, Helicopter services and
seaplanes under the automatic route.
Up to 100% FDI is permitted in MRO for maintenance and repair organizations; flying training
institutes; and technical training institutes under the automatic route.
Up to 100% FDI is permitted in Ground Handling Services subject to sectoral regulations &
security clearance under the automatic route.
100% FDI under automatic route has been allowed in Brownfield Airport projects.
For further details, please refer FDI Policy
 11%
Passenger Traffic Growth

 15.9%
Foreign Tourist Arrival growth

 3.6
Total Freight Traffic (MMT)

 14.4%
Domestic Aircraft Movement Growth
 Industry Scenario
The rise in demand for air travel in India has necessitated the
development of a robust ecosystem and supportive government policies.

Through the National Civil Aviation Policy 2016 (NCAP) the government plans to take
flying to the masses by enhancing affordability and connectivity. It promotes ease of doing
business, deregulation, simplified procedures, and e-governance. In April 2020, the Goods
and Services Tax for MRO services rendered locally was reduced from 18% to 5%. The
‘place of supply’ for B2B MRO services was changed to the ‘location of recipient’, enabling
Indian MRO facilities to claim zero-rating (i.e., export status) under GST laws on MRO
services rendered to prime contractor/OEM located outside India. This has been an extremely
crucial policy amendment as it will encourage global participation in the Indian aviation
sector by allowing foreign MRO operators to subcontract MRO work to Indian entities
without any extra tax liability.
The Regional Connectivity Scheme or UDAN (‘Ude Desh ka Aam Nagrik’) is a vital
component of NCAP 2016. The scheme plans to enhance connectivity to India's unserved and
under-served airports and envisages to make air travel affordable and widespread. Over 92
lakh people have benefited from it and more than 1 lakh 79 thousand flights have flown under
this scheme. 
The aircraft leasing and financing businesses are operated from the International Financial
Services Centre (IFSC) and GIFT City provides the off-shore status for financial
services. Read More
MOCA released Krishi UDAN 2.0. The Scheme lays out the vision of improving value
realization through better integration and optimization of Agri-harvesting and air
transportation and contributing to Agri-value chain sustainability and resilience under
different and dynamic conditions. After a 6-month successful pilot of Krishi Udan 2.0 it was
decided to add 5 new airports namely Belagavi, Jharsuguda, Jabalpur, Darbhanga and Bhopal
to the existing list of 53 airports, taking the number of airports actively participating in Krishi
Udan to 58. 
Monetising Assets: AAI has formed joint ventures in seven airports. Recently, it awarded six
airports — Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram, Mangaluru — for
operations, management and development under PPP for a period of 50 years. As per
National Monetisation Pipeline (NMP), 25 AAI airports have been earmarked for asset
monetisation between 2022 and 2025. 
 
GROWTH DRIVERS
 NABH (NextGen Airports for Bharat)
Nirman is a government initiative to expand airport capacity more than five times to handle
bn trips a year, in the next 10-15 years.
 GIFT City Advantage for Aviation Sector
Aircraft Leasing and Tax Incentives available in GIFT city
 Regional connectivity Scheme
Boost air connectivity to smaller cities & northeast states
 Recent Announcements
 Oct 19, 2022
About INR 95,000 Crores to be Invested in the Aviation Sector in the Next Four Years.

 Oct 19, 2022

Boeing India, MIDHANI collaborate to create raw materials for aerospace parts.

 Oct 17, 2022

Union Home and Cooperation Minister Shri Amit Shah lays foundation stone of the new
terminal building of Rajmata Vijayaraje Scindia Gwalior Airport.

 Jul 05, 2022

Safran  to set up a Maintenance, Repair and Overhaul (MRO) facility through direct foreign
investment of $US 150 million in Hyderabad for overhaul of LEAP-1A & LEAP-1B engines
in use by Indian and foreign commercial airlines. The facility will be able to overhaul over
250 engines per year in the beginning and is expected to create 500-600 highly skilled jobs.

 May 10, 2022

Adani Airports raises $ 250 million for airports development

 Feb 12, 2022

The Airports Authority of India (AAI) and other airport developers have targeted a capital
outlay of INR 91,000 crore over the next five years.

I ND US TR Y TR EN DS

Increase in Indian carriers

Number of airplanes is expected to grow to 1,100 by 2027


 Public-Private Partnerships (PPP)
$ 3 bn investments in green-field airports – Navi Mumbai and Goa

Focus on airport modernization

Airport Authority of India to spend $ 3 bn on non-metro projects over 2016-2020

Growth and Expansion

Authority of India (AAI) has taken up a development programme to spend around INR 25,000 crore in
next five years for expansion and modification. Furthermore, Three Public Private Partnership (PPP)
airports at Delhi, Hyderabad and Bengaluru have undertaken major expansion plan to the tune of INR
30,000 Crores by 2025. Additionally, INR 36,000 Crores have been planned for investment in the
development of new Greenfield airports across the country under PPP mode.

Production Linked Incentive (PLI) Scheme

The Central Government under the leadership of Hon’ble Prime Minister Shri Narendra Modi,
has approved the Production-Linked Incentive (PLI) scheme for dronesand drone components.
The PLI scheme comes as a follow-through of the liberalised Drone Rules, 2021 released by the
Central Government on 25 August 2021. The PLI scheme and new drone rules are intended to
catalyse super-normal growth in the upcoming drone sector. Last date for submitting the
application form is 20th May 2022

INR 120 cr
Scheme Outlay