The civil aviation industry in India has emerged as one of the fastest-growing industries in the nation and is undoubtedly among the fastest-growing in the world. This can be said in terms of domestic traffic; the Indian civil aviation industry has expanded to become the third largest in the world. It is anticipated that by 2024, India's domestic aviation market will rank third internationally, contributing $ 30 Bn yearly to Gross Domestic Product (GDP). Even though the Covid-19 pandemic's effects have been adverse to human beings, and so is for the world's aviation sector, India has shown no signs of giving up on its ambition to become a leader in everything, including aviation, over the next ten years. The aviation industry is making the much-needed development leap thanks to its tenacity and the government's consistent measures to support and transform it.

The aviation industry has seen demand due to an increasing share of middle-class households having accessibility and affordability to air travel, strong competition among low-cost, efficient carriers, infrastructure development and a supportive governmental environment for its growth. To point out the growth and demand in commercial air travel through numbers, it is observed that passengers who travelled either to or from or within India increased from 79 Mn in 2010 to 158 Mn in 2017, which is more than double the previous number. By 2037, it is projected to reach 520 Mn. Passenger traffic growth has thus increased by 11 per cent. To satisfy the growing demand, by 2038, the country's aircraft fleet is anticipated to grow fourfold to about 2500 aircraft. The government has also pledged to build 100 additional airports by 2024 of the Ude Desh ka Aam Nagrik (UDAN) scheme. The air fleet number is also expected to increase from 600 to 1200.

India also has a strong potential to be a global drone hub by 2030. For the same, Narendra Modi, Prime Minister of India, authorised the Production-Linked Incentive (PLI) scheme for drones and drone components as of August 2021. As part of the Atmanirbhar Bharat Abhiyan, the plan aims to create a competitive and self-sustaining drone manufacturing market in the nation. According to the most recent PLI for the auto and drone industries, INR 120 Cr has been sanctioned for the drone market to spur supernormal growth in this emerging industry. One of the digital projects the Directorate General of Civil Aviation (DGCA) has undertaken to track and promote drone industry growth is called DigiSky. The DigiSky internet site expedites registering drones and their operators while certifying their flight path and offering post-flight analysis.

Freight traffic

*freight traffic expected to cross 11.4 MT by 2032 in Indian airports

The Indian civil aviation, maintenance, repair and operations (MRO) market is currently worth around $ 900 Mn. After the pandemic, a projected expansion of India's commercial and business fleet is seen as an essential factor influencing the demand for MRO services in the nation. As a result, it is projected to increase at a Compound Annual Growth Rate (CAGR) of roughly 14– 15 per cent to $ 4.33 Bn by 2025.

India's MRO facilities would need to increase in size to accommodate the growing number of airports and aircraft in the nation. MRO is the umbrella term that refers to all aspects of maintaining and restoring aircraft. In addition to planning to satisfy these demands, the incumbent government wants to make India a centre for aviation maintenance, repair, and overhaul. Since the tools used by MRO services in India are no longer subject to customs duties, larger and foreign fleets can be serviced more quickly. The Tirupati airport was recognised by the Ministry of Civil Aviation (MoCA) for development as a national hub for aircraft MRO in April 2022. The MRO facility is to be provided on a design, build, operate, maintain and transfer basis.

Foreign direct investment (FDI) in the aviation sector is crucial as it helps increase the number of operational airports and aircraft, in manufacturing and operations, as well as in the research and development (R&D) for improvement and growth of the aviation sector. In scheduled air transport, regional air transport, and domestic scheduled passenger airlines, the government has authorised 100 per cent FDI under the automatic route. However, government clearance would be needed for FDI above 49 per cent. In the upcoming four years, investments totalling $ 4.99 Bn are anticipated in India's aviation sector. By 2026, the Indian government intends to spend $ 1.83 Bn on expanding airport infrastructure and aviation navigation services.

The aviation sector in India achieved a few milestones in terms of development, better connectivity with far-off regions, sustainability and reduced carbon footprint. Cochin International Airport was the first "green airport" in the world with a low carbon footprint, which inspired the world to move towards sustainability. India has also operationalised around eight greenfield airports, namely, Shirdi and Sindhudurg in Maharashtra, Durgapur in West Bengal, Pakyong in Sikkim, Kannur in Kerala, Orvakal in Andhra Pradesh, Kalaburagi in Karnataka and Kushinagar in Uttar Pradesh as of Nov 2021. Connectivity between east India and the rest of India has also been increased through airlines flagging off direct flights, for example, from Guwahati (Assam) to Pune (Maharashtra).

Government initiatives in the aviation sector

  • The UDAN scheme is the government's multifaceted approach to making air travel affordable and accessible while simultaneously increasing job opportunities and improving the connectivity between the urban centres and the underdeveloped regions within the country (i.e. Himalayan and North Eastern areas in the hills). This will ensure accessibility during medical emergencies and search-and-rescue operations. Furthermore, under the UDAN scheme, the government is keen to introduce more low-cost carriers into the market and cap airfares that are to be subsidised in uncompetitive areas
  • The International Air Connectivity Scheme (IACS), announced by the Ministry of Civil Aviation, aims to improve air connectivity between some states in India and a few international locations to spur socio-economic development. For example state governments of Assam and Manipur have identified routes to connect Guwahati and Imphal with international locations like Bangkok, Dhaka, Yangon and others 
  • Seven airports have collaborative ventures with the Airports Authority of India (AAI), where the ones in Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram, and Mangaluru received awards for operations, management, and development under Public Private Partnership (PPP) for 50 years. 25 AAI airports have been designated for asset monetisation between 2022 and 2025following the National Monetisation Pipeline (NMP).
  • Several foreign aviation corporations have invested in the subcontinent's aviation market due to the rapid economic transformation in India's aviation industry.  AAI is collaborating with companies like Airbus (France), Boeing (United States of America), Etihad Airways (United Arab Emirates), and Fairfa (United Kingdom), to mention a few.


Opportunities for investment in the aviation sector in India

  • As the demand for MRO facilities in India increases, airports and aircraft will also increase. Indian carriers are projected to increase their fleet size to 1,100 aircraft by 2027. This expands the scope of investment and growth in the sector
  • The PPP model Greenfield airports are expanding from seven to nine, including Mumbai and Goa. This brings in investment opportunities worth $ 3 Bn in the sector
  • Indian airports are emulating the Special Economic Zone (SEZ) aerotropolis model to enhance revenues (involves the development of an airport-based city with accessibility to air travel surrounded by educational, healthcare, hospitability and entertainment centres). The model focuses on sales of goods and services, advertising, parking for automobiles, and security tools and services
  • Over the next five years, AAI has committed to development projects worth around $ 3 Bn for new terminal construction, terminal extension and modification, runway and apron strengthening, air navigation services, control towers, technical buildings, etc.

Despite the Covid-19 pandemic, the Indian aviation sector has been back on track. The government supports this industry and is prepared to take any necessary step to establish India as a global leader in aviation-related needs. One could say that we are laying the groundwork for a future in which the average Indian citizen has accessibility and ease to flying, thanks to the restoration of airports, the doubling of the national aircraft fleet, and a shift toward a public-private partnership model. The amount of foreign investment, like Airbus (France), Rolls Royce (UK), and GE Aviation (US), is a sign that the world is aware of the changes taking place in the Indian aviation industry.


This has been authored by Bhakti Jain and Ishita Dhar.

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