• 14th Pravasi Bharatiya Divas, Bengaluru
  • 14th Pravasi Bharatiya Divas, Bengaluru
  • A Coffee Table publication titled, "20 Mission Drive Social Impact Innovations" produced by Economic Diplomacy Division was released by the Hon'ble Prime Minister
  • Hon'ble Prime Minister Sh. Narendra Modi felicitating the 20 innovators selected through the MEA-NITI Aayog National Social Innovation Contest.
  • Global Technology Summit 2016 Click here for details
  • Global Technology Summit 2016 Click here for details
  • Ministry of External Affairs organises India-Latin Americas and the Caribbean (LAC) Conclave in Guadalajara, Mexico to enhance economic cooperation between India and LAC countries.
  • Ministry of External Affairs organises India-Latin Americas and the Caribbean (LAC) Conclave in Guadalajara, Mexico to enhance economic cooperation between India and LAC countries.
  • Global Technology Summit 2016 Click here for details
  • National Contest on Social Innovation, Pravasi Bhartiya Divas 2017
  • The Framework Agreement of the International Solar Alliance was opened for signing on 15 November 2016. On the first day of its opening 16 countries have signed the framework agreement. More countries are expected to sign the framework agreement in the coming days.
  • MEA - ED and BM Divisions along with Cll organized the India- Myanmar Business Roundtable on 19 October 2016 in New Delhi
  • ED Division continues MEAs engagement with Africa by sponsoring the India Africa Health Sciences Meet in New Delhi
  • 18 member multi-sector delegation from Nanjing, China interacting with Shri Nagaraj Naidu, Director & HOD, ED on 16 August 2016
  • Hon'ble Minister for External Affairs chaired Pravasi Bhartiya Diwas Panel-6 on "Edu, S&T & Innovation" on 30 July 2016. The Panel discussed tech solutions for societal problems, edu for tomorrow and Start Ups.
  • Hon'ble Prime Minister inaugurated investment guides for Indian investors who wants to do business with Kenya and Mozambique during his recent tri-nation visit to Africa. The publication was brought by ED Division with support from Indian Missions in Kenya and Mozambique.
  • Indian dignitaries at the inauguration of India pavilion at INNOPROM exhibition in Yekaterinburg Russia
  • ED Division facilitated visit of a Chinese delegation led by Mr Wang Hao, Mayor of Chaoyang district of Beijing Municipality and arranged meetings with officials of Municipal Corporation of Gurgaon and FICCI on 21 June 2016. (Press Release)
  • ED Division facilitates meeting of CEO of the British Columbia Investment Management Corporation Mr Gordon Fyfe and Team with Hon'ble Transport Minister Shri Nitin Gadkari and CEO NITI Aayog Shri Amitabh Kant on 16 June 2016
  • ED Division facilitates meeting of CEO of the British Columbia Investment Management Corporation Mr Gordon Fyfe and Team with Hon'ble Minister of Finance, Shri Arun Jaitley and CEO NITI Aayog Shri Amitabh Kant on 16 June 2016
  • Inter-Ministerial Meeting on Pharmaceuticals and Healthcare Sector in Africa
  • BRICS India 2016
  • Smt. Harsimrat Kaur Badal, Minister of Food Processing & Industry briefing representatives of foreign Embassies on opportunities in food processing sector in India in a meeting facilitated by ED Division on 17 March 2016 at Panchsheel Bhawan, New Delhi.
  • Investment
  • India at a glance
  • Trade
  • Economy

Industry & Sectors

Civil Aviation

Last Updated on : October, 2016

Introduction

India’s civil aviation industry is on a high-growth trajectory. India aims to become the third-largest aviation market by 2020 and the largest by 2030. 

The Civil Aviation industry has ushered in a new era of expansion, driven by factors such as low-cost carriers (LCCs), modern airports, Foreign Direct Investment (FDI) in domestic airlines, advanced information technology (IT) interventions and growing emphasis on regional connectivity. India is the ninth-largest civil aviation market in the world, with a market size of around US$ 16 billion. India is expected to become the third largest aviation market by 2020#.

“The world is focused on Indian aviation – from manufacturers, tourism boards, airlines and global businesses to individual travellers, shippers and businessmen. If we can find common purpose among all stakeholders in Indian aviation, a bright future is at hand” said Mr. Tony Tyler, Director General and CEO, International Air Transport Association (IATA).

Market Size

During January-August 2016, domestic air passenger traffic rose 23.14 per cent to 64.47 million from 52.36 million during the same period in 2015. Passenger traffic during FY 2015-16 increased at a rate of 21.3 per cent to 85.57 million from 70.54 million in the FY 2014-15.

In July 2016, total aircraft movements at all Indian airports stood at 168,400, which was 14.3 per cent higher than July 2015. International aircraft movements increased by 8.2 per cent to 32,830 in July 2016 from 30,330 in July 2015. Domestic aircraft movements increased by 15.8 per cent to 135,570 in July 2016 from 117,050 in July 2015.

Indian domestic air traffic is expected to cross 100 million passengers by FY2017, compared to 81 million passengers in 2015, as per Centre for Asia Pacific Aviation (CAPA).

India is among the five fastest-growing aviation markets globally with 275 million new passengers. The airlines operating in India are projected to record a collective operating profit of Rs 8,100 crore (US$ 1.29 billion) in fiscal year 2016, according to Crisil Ltd.

Investment

According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI inflows in air transport (including air freight) between April 2000 and March 2016 stood at US$ 931.05 million.

Key investments and developments in India’s aviation industry include:

  • Airbus SAS has signed an agreement with Karnataka-based Aequs Aerospace, an aircraft component maker, for the supply of over 100,000 titanium machined parts for its A320 new engine option (NEO) aircraft.
  • Boeing Company, an American plane maker, and Tata Advanced Systems Ltd (TASL), a fully owned subsidiary of Tata Sons, have entered into a joint venture to set up a new facility in Hyderabad to manufacture Boeing AH-64 Apache helicopter fuselages.
  • GoAir, India's fifth-biggest carrier by passengers travelled, has signed a memorandum of understanding (MoU) with Airbus to buy 72 A320neo aircrafts, valued at US$ 7.7 billion, as part of an expansion drive.
  • Lockheed Martin Corporation plans to make India a manufacturing base for its F-16V fighter jets, C-130J Super Hercules military transport planes and helicopters.
  • Auto components maker Bharat Forge Ltd (BFL), the flagship company of the US$ 3 billion Kalyani Group, has formalised agreement with Rolls-Royce Plc, under which BFL will supply critical and high integrity forged and machined components for a range of aero engines.
  • The Ministry of Civil Aviation has signed Memorandum of Understanding (MoU) with Finland, Kazakhstan, Kenya, Sweden, Norway, Denmark, Oman and Ethiopia for increased co-operation between the countries in terms of additional seats, sharing of airlines codes, increased frequencies and additional points of call, during the International Civil Aviation Negotiations (ICAN),2015 held in Antalya, Turkey.
  • Tata Advanced Systems (TASL) has signed a joint venture with American aircraft manufacturing major, Boeing, to establish a centre of excellence for manufacturing aerostructures for Apache helicopter initially and collaborate on integrated systems development opportunities in India in the long term.
  • US-based aircraft manufacturer Boeing plans to assemble one of its two helicopters namely, Chinook (heavy-lift) or Apache (attack type) in India, thus becoming yet another global company to invest in India encouraged by the ‘Make in India’ campaign.
  • Airbus, leading European aircraft manufacturer, plans to invest US$ 40 million to set up a pilot and maintenance training center in New Delhi, which will be operational by the end of 2017.
  • Airbus also expects India’s aviation industry to grow at over 10 per cent annually in the next decade, almost double the average growth rate of the global aviation industry.

Government Initiatives

Government agencies project that around 500 brownfield and greenfield airports would be required by 2020. The private sector is being encouraged to become actively involved in the construction of airports through different Public Private Partnership models, with substantial state support in terms of financing, concessional land allotment, tax holidays and other incentives.

In the Union Budget 2016-17, the government introduced various proposals for Maintenance, Repair and Overhaul (MRO) operations for airplanes. These include customs and excise duty exemption for tools and tool-kits used in MRO works. The government has also scrapped the one-year restriction for utilisation of duty free parts apart from allowing import of unserviceable parts by MROs for providing exchange. As per revised norms, the foreign aircraft brought in to India for MRO work would now be permitted to stay up to six months or as extended by aviation regulator Directorate General of Civil Aviation (DGCA). Such foreign aircraft would also be henceforth permitted to carry passengers in the flights at the start and end of its period of stay in India.

Some major initiatives undertaken by the government are:

  • The Ministry of Civil Aviation has finalised and put forward for approval to the Union Cabinet, the new aviation policy, which includes proposals such as allowing new airlines to fly abroad, introduction of more regional flights and a new formula for granting bilateral flying rights.
  • The Indian Space Research Organisation (ISRO) has signed a memorandum of understanding (MoU) with the Airports Authority of India (AAI), aimed at providing space technology for construction of airports.
  • The Government of India is planning to boost regional connectivity by setting up 50 new airports over the next three years, out of which at least 10 would be operational by 2017.
  • Airports Authority of India (AAI) plans to develop city-side infrastructure at 13 regional airports across India, with help from private players for building of hotels, carparks and other facilities, and thereby boost its non-aeronautical revenues.
  • Directorate General of Civil Aviation (DGCA), India's aviation regulator, has signed an agreement with United States Technical Development Agency (USTDA) for India Aviation Safety Technical Assistance Phase II, aimed at bringing in systemic improvements in the area of operation, airworthiness and licensing.
  • The Government of India has given site clearance to Delhi Mumbai Industrial Corridor and Development Corporation (DMICDC) for setting up of a Greenfield Airport for public use near Bhiwadi in Alwar district of Rajasthan and has granted 'in-principle' approval to 13 other greenfield airport projects.
  • The Airports Authority of India (AAI) plans to revive and operationalise around 50 airports in India over the next 10 years to improve regional and remote air connectivity.
  • Gujarat is expected to get a second international airport at Dholera. The state government has formed Dholera International Airport Co. Ltd. and is obtaining approvals from the union government.
  • The Directorate General of Civil Aviation (DGCA) has given its approval to Air India’s maintenance, repair and overhaul (MRO) unit.
  • The Government of India has decided to award airports in Kolkata, Chennai, Jaipur and Ahmedabad on management contract. AAI has issued the ‘Request for Qualification’ document for these four airports.

Road Ahead

India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for majority of the country’s population, of which nearly 40 per cent is the upwardly mobile middle class. 

The industry stakeholders should engage and collaborate with policy makers to implement efficient and rational decisions that would boost India’s civil aviation industry. With the right policies and relentless focus on quality, cost and passenger interest, India would be well placed to achieve its vision of becoming the third-largest aviation market by 2020 and the largest by 2030.

Exchange Rate Used: INR 1 = US$ 0.0149 as on September 30, 2016.

References: Media Reports, Press Releases, Press Information Bureau, Directorate General of Civil Aviation (DGCA), Airports Authority of India (AAI), Union Budget 2016-17

Notes: # - According to the FICCI-KPMG ‘India Aviation Report 2016’

DOING BUSINESS IN INDIA

A study has been done by Ernst and Young India with the intention of providing an overview of the investment climate, taxation, forms of business organisations, and business and accounting practices in India.

To view full Text Click Here