Introduction
India is poised to become the world’s third-largest aviation market, marking a transformative phase in its civil aviation sector. This growth is not merely in numbers but is underpinned by strategic reforms, infrastructure expansion, and a vision to integrate over a billion people with global connectivity. Aviation acts as a key driver of economic and social development, fostering job creation, enhancing business links, and positioning India as a global connectivity hub.
Current Status
- India’s fleet is rapidly expanding with around 1,300 new commercial aircraft ordered in the last two years, indicating robust industry confidence.
- The number of operational airports has more than doubled, growing from 74 in 2014 to 159 presently, with ambitious plans to increase this to over 220 by 2025.
- Domestic passenger traffic showed steady growth, albeit modest (4-6% in 2025-26), while international passenger traffic for Indian carriers is projected to rise 13–15%.
- The government’s modified UDAN scheme aims to enhance regional connectivity, adding 120 new destinations and carrying over 40 million passengers in the coming decade.
- Despite challenges such as fuel costs and regulatory hurdles, India’s per capita air travel remains low at 0.14 trips annually, highlighting vast growth potential.
- Indian carriers currently operate under 90 wide-body long-haul aircraft compared to 450+ in the Gulf, emphasizing room for expansion in global long-haul connectivity.
- Delhi is strategically positioned to become a true global hub, incentivized by infrastructure enhancement, regulatory reforms, and improved multimodal connectivity.
Challenges in aviation sector
- High aviation turbine fuel (ATF) costs, especially with VAT rates as high as 25% in Delhi, hamper competitiveness compared to neighboring hubs with much lower fuel taxes.
- Maintenance, Repair, and Overhaul (MRO) facilities remain underdeveloped domestically, leading to significant foreign exchange outflows and longer turnaround times.
- Dependence on Original Equipment Manufacturers (OEMs) for design data limits India’s ability to develop a comprehensive domestic MRO ecosystem.
- Skilling shortages and limited advanced R&D facilities impede the evolution of a high-quality aerospace manufacturing and services industry.
- Infrastructure bottlenecks such as land acquisition delays, regulatory complexities around tariff and land-use, and multimodal connectivity gaps restrict seamless aviation sector growth.
Way Forward
- Rationalize ATF taxation by reducing VAT to 4-5% and integrating ATF under GST to enhance cost predictability and sector competitiveness.
- Promote the development of indigenous MRO capabilities leveraging public-private partnerships and policy reforms such as the ‘Right to Repair’ legislation.
- Provide targeted fiscal incentives—reduced GST, customs duty exemptions, tax credits, and subsidies—for aerospace R&D and component manufacturing.
- Enhance skilling through modular aerospace skill centers and strengthen collaborations between flight test engineers, pilots, and industry stakeholders.
- Expedite airport infrastructure projects and enable new greenfield airports while streamlining regulations to unlock their full economic potential.
- Strengthen India’s position as an international transit hub by expanding wide-body aircraft fleets and improving airport multimodal connectivity.
- Digitize cargo operations, develop free trade zones, improve cold chain logistics, and first-mile infrastructure to boost cargo handling efficiency.
Conclusion
India’s journey to becoming a global aviation powerhouse is both aspirational and achievable through coherent policy action, infrastructure upgrades, and innovation. Building a seamless ecosystem encompassing airports, airline fleets, MRO, and skilled manpower will unlock high economic multipliers, enhance global connectivity, and secure India’s strategic position in the international aviation arena by 2030 and beyond. The sector’s continued growth promises to be transformative, not only linking people and businesses but also significantly contributing to India’s economic development and global outreach.
Source – BusinessLine
