Aviation industry in India.

 Indian Aviation Industry. 

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 123.2 Mn in 2022 (Jan-Dec). The number of international passengers recorded were 43.4 Mn in 2022-23 (Jan-Dec). In terms of aircraft, the numbers have increased from around 400 in 2014 to 723 in 2023.

Currently, the country has 157 operational airports which including 2 Water aerodromes and 13 Heliports. Among them, there are 33 international, 113 domestic, and 11 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 85 airports have been developed. More than 2.76 Lakh UDAN flights have operated and over 14.19 Mn 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 $1.8 Bn by 2026.

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 Apr 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 2.76 Lakh UDAN flights have operated and over 14.71 Mn passengers have availed the benefits in UDAN flights as on 31st Jul 2024. 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. 

National Air Sport Policy launched in June 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.

Directorate General of Civil Aviation

The Directorate General of Civil Aviation (DGCA) is the regulatory body in the field of Civil Aviation, primarily dealing with safety issues. It is responsible for regulation of air transport services to/from/within India and for enforcement of civil air regulations, air safety, and airworthiness standards. The DGCA also co-ordinates all regulatory functions with the International Civil Aviation Organisation (ICAO).

Private operators were allowed to provide air transport services. However, no foreign airline could directly or indirectly hold equity in a domestic airline company. By 1995, several private airlines had ventured into the aviation business and accounted for more than 10 percent of the domestic air traffic. Today, Indian aviation industry is dominated by private airlines and these include low cost carriers, who have made air travel affordable. The Government nationalized nine airline companies vide the Air Corporations Act, 1953. These government-owned airlines dominated Indian aviation industry till the mid-1990s. In April 1990, the Government adopted open-sky policy and allowed air taxi- operators to operate flights from any airport, both on a charter and a non charter basis and to decide their own flight schedules, cargo and passenger fares. As part of its open sky policy in 1994, the Indian Government ended the monopoly of IA and AI in the air transport services. Private operators were allowed to provide air transport services. However, no foreign airline could directly or indirectly hold equity in a domestic airline company. By 1995, several private airlines had ventured into the aviation business and accounted for more than 10 percent of the domestic air traffic. Today, Indian aviation industry is dominated by private airlines and these include low cost carriers, who have made air travel affordable.

Registration of civil aircraft.

• Formulation of standards of airworthiness for civil aircraft registered in India and grant of certificates of airworthiness to such aircraft.
• Licensing of pilots, aircraft maintenance engineers and flight engineers, and conducting examinations and checks for that purpose.
• Licensing of air traffic controllers.
• Certification of aerodromes and CNS/ATM facilities.
• Granting of Air Operator's Certificates to Indian carriers and regulation of air transport services operating to/from/within/over India by Indian and foreign operators, including clearance of scheduled and non-scheduled flights of such operators.
• Conducting investigation into accidents/incidents and taking accident prevention measures including formulation of implementation of Safety Aviation Management programmes.
• Carrying out amendments to the Aircraft Act, the Aircraft Rules and the Civil Aviation Requirements for complying with the amendments to ICAO Annexes, and initiating proposals for amendment to any other Act or for passing a new Act in order to give effect to an international Convention or amendment to an existing Convention.
• Coordination at national level for flexi-use of air space by civil and military air traffic agencies and interaction with ICAO for provision of more air routes for civil use through Indian air space.
• Keeping a check on aircraft noise and engine emissions in accordance with ICAO Annex 16 and collaborating with the environmental authorities in this matter, if required.
• Promoting indigenous design and manufacture of aircraft and aircraft components by acting as a catalytic agent.
• Approving training programmes of operators for carriage of dangerous goods, issuing authorizations for carriage of dangerous goods, etc.