Snapshot

Indian Aviation, Flying High

A rising proportion of middle-income households, healthy competition amongst Low-Cost Carriers, infrastructure buildup at leading airports and supportive policy framework has given a positive push to the aviation sector.

The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years and can be broadly classified into scheduled air transport service which includes domestic and international airlines, non-scheduled air transport service which consists of charter operators and air taxi operators, air cargo service, which includes air transportation of cargo and mail.

The total number of domestic passenger in 2014 was 60 Mn which doubled to 143 Mn in 2020 prior to Covid-19. International passengers have increased from 43 Mn to 64 Mn (increase of almost 50%). In terms of aircraft, the numbers have increased from around 400 in 2014 to 723 in 2023 despite the impact of Covid-19.

Currently, the country has 148 operational airports which includes 137 airports, 2 Water aerodromes and 9 Heliports. Among them there are 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. 

To augment the airport infrastructure the government aims to develop 100 airports by 2024 (under the UDAN Scheme). Till date 76 airports have been developed. More than 2.15 Lakh UDAN flights have operated and over 1.1 Cr passengers have availed the benefits in UDAN flights so far.

The projected upsurge in air travel in India would require more aircraft usage, further igniting the demand for Maintenance, Repair & Overhaul (MRO) services. The Indian Civil Aviation MRO market, at present, stands at around $900 Mn and is anticipated to grow to $4.33 Bn by 2025 increasing at a CAGR of about 14-15%. Unmanned aerial vehicles, also known as drones have been welcomed across industries. Indian drone industry is expected to have a total turnover of up to US$ 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

  • %

    Passenger Traffic Growth

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    Foreign Tourist Arrival growth

  • Total Flying Training Organizations

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    Domestic Aircraft Movement Growth

519 routes and 76 airports have been operationalised under RCS-UDAN since its launch.

In December 2022, the DigiYatra App was launched at Delhi Airport to facilitate a contactless air travel experience.

The union government announced Drone Shakti in the Budget 2022 with the aim of facilitating and promoting drones as a service through startups.

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. More than 2.15 lakh UDAN flights have operated and over 1.1 Cr passengers have availed the benefits in UDAN flights as on 30th November 2022. The Government has set a target to operationalize 1,000 UDAN routes and to revive/develop 100 unserved & underserved airports/heliports/water aerodromes (including 68 aerodromes) by 2024.

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. 

The Minister of Civil Aviation Shri Jyotiraditya M. Scindia launched National Air Sport Policy in June 2022. NASP 2022 lays out the vision of making India as one of the top sports nations by 2030, by providing a safe, affordable, accessible, enjoyable, and sustainable air sports ecosystem in India. Air sports, as the names suggests, encompasses various sports activities involving the medium of air. These include sports like air-racing, aerobatics, aero modelling, hang gliding, paragliding, para motoring and skydiving etc.

GROWTH DRIVERS

  • CAPEX Plan

    Both AAI and other PPP Airport Operators have embarked upon a Capex Plan for more than INR 98,000 Cr including around INR 25,000 Cr by AAI during 2019-24 for development/ upgradation/ modernisation of various brownfield airports and developing Greenfield Airports to meet the passenger growth and make air travel safer, comfortable and customer friendly.

  • 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

  • AAI Startup Policy

    Delivering a framework & mechanism for the interaction of AAI with internal and external stakeholders that catalyze innovation at airports and leveraging technology for addressing challenges and enhancing the delivery of services to passengers.

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Production Linked Incentive (PLI) Scheme

The Central Government under the leadership of Hon’ble Prime Minister Shri Narendra Modi, has approved the PLI scheme for drones and drone components. The PLI scheme comes as a follow-through of the liberalized Drone Rules, 2021 released by the Central Government on 25 August 2021. The PLI scheme and new drone rules are intended to catalyze super-normal growth in the upcoming drone sector. The total incentive of INR 120 crores and the total PLI per manufacturer is capped at INR 30 crores. The scheme has multiple features to help the industry as It is nearly double the combined turnover of all domestic drone manufacturers in FY 2020-21. For this scheme, the PLI rate is 20% of the value addition which is one of the highest among PLI schemes. With the implementation of the liberalised drone rules, Production-Linked Incentive (PLI) scheme and the drone import policy, it is estimated that the annual sales turnover of the Indian drone manufacturing industry may grow from approximately INR 60 crore in 2020-21 to approximately INR 900 crore by 2024-25. The PLI rate is kept constant at 20% for all three years, which is an exceptional treatment for the drone industry in the country. The Minimum value addition norm has been at 40% of net sales for drones and drone components instead of 50% which is another exceptional treatment for the industry. A provisional list of 23 PLI beneficiaries was released on 6th July 2022. The beneficiaries include 12 drone manufacturers and 11 drone component manufacturers.

  • INR 120 Cr

    Scheme Outlay

Industrial Land Bank Portal

GIS - based map displaying available infrastructure for setting up business operations in the state.

Investible Projects

Investment Opportunities in Aviation

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    FAQs

    Frequently
    Asked Questions

    What are the clauses under performance guarantee?

    Some of the main clauses are as follows:
    a) Airline operator must enter into a three year contract with the implementing agency.
    b) Submit a performance guarantee fees of 5% of the total VGF amount.
    c) Additional guarantee required for non-operational airports.

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    What are the proposal submission requirements of an airline / helicopter operator under the RCS?

    As part of the the proposal submission, an applicant shall be required to submit information under the following categories, as may be specified in detail from time to time:
    a) Information about the Applicant
    b) Technical Proposal
    c) Financial Proposal

    More details about the proposal submission can be found here: https://www.civilaviation.gov.in/sites/default/files/2023-12/Tender%20Document%20%281%29.pdf

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    What is Regional Connectivity Scheme (RCS)?

    Regional Connectivity Scheme aims to make flying affordable for the masses, to promote tourism, increase employment and promote balanced regional growth. It also intends to put life into un-served and under-served airports.

    For more information, click here.

     

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    What are the major objective under National Policy on Civil Aviation 2016?

    Major objectives under National Policy on Indian Civil Aviation industry:
    i) Establish an integrated eco-system which will lead to significant growth of civil aviation sector, which in turn would promote tourism, increase employment and lead to a balanced regional growth.
    ii) Ensure safety, security and sustainability of aviation sector through the use of technology and effective monitoring.
    iii) Enhance regional connectivity through fiscal support and infrastructure development.
    iv) Enhance ease of doing business through deregulation, simplified procedures and e-governance.
    v) Promote the entire aviation sector chain in a harmonised manner covering cargo, MRO, general aviation, aerospace manufacturing and skill development

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    What is the procedure to carry out cargo services related transactions electronically with AAI?

    Any exporter/importer/Customs House Agents/Airlines etc. who wish to transact electronically with AAI, would be mandatory required to get register with AAI at http://aaiclas-ecom.org Registration is mandatory for Message Exchange activities also.

    Registration Process:
    User has to fill up the physical registration form along with relevant documents and submit to Airports Authority of India (AAI). AAI would ascertain the correctness of the details submitted. Users are requested to fill valid E-Mail address and Phone Number(s) in Registration form to enable AAI to perform further communications regarding User ID and Password allocation. Users are requested to immediately change the password(s) assigned by AAI.
    Non Registered Users are not restricted from functionalities pertaining to Consignment Status, Charges Calculation Estimate Sheet and Cargo Procedures. Same features are available for registered users. In addition, Registered Users enjoy the privilege of accessing functionalities related to Printing of Charge related Documents, Payment transactions and Pre- Deposit account related statements.

    For more details please refer the link.

     

     

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