Opportunity for Investment in India’s Aviation Sector

Syllabus: GS 3/Economy  

In News

• Prime Minister Narendra Modi recently highlighted India’s rapidly growing aviation sector as a major investment opportunity. 

India’s aviation sector

• It is rapidly expanding, driven by rising demand and strong government support through strategic policies. 
• This transformation has made India the world’s third-largest domestic aviation market, after the U.S. and China. 
• Government initiatives have played a key role in modernizing and empowering the industry, positioning it as a major player in the global aviation landscape.

Government Steps 

• Parliament passed the Protection of Interest in Aircraft Objects Bill, 2025, aligning India’s aviation leasing laws with global standards to reduce leasing costs.
• The Bharatiya Vayuyan Adhiniyam 2024 modernized India’s aviation sector, replacing the colonial-era Aircraft Act from 1934.
• Entering its 9th year, the UDAN scheme has successfully operationalized 619 routes and 88 airports, with plans to expand to 120 additional destinations.
• UDAN Yatri Cafés launched at Kolkata and Chennai Airports, providing passengers with affordable, quality food.
• Rapid aviation infrastructure expansion continued, with significant progress in operationalizing Greenfield airports and upgrading existing facilities nationwide.
• A uniform 5% Integrated Goods and Services Tax (IGST) rate has been introduced for aircraft parts to promote India as a competitive global Maintenance, Repair & Overhaul (MRO) hub.
  • 100% Foreign Direct Investment (FDI) under the automatic route, GST reduction, and tax rationalisation measures have given a momentum to India’s MRO sector.

Progress 

• The total number of air passengers annually has exceeded 350 million, firmly establishing India as the third-largest aviation market globally.
• Over the past decade, domestic air passenger traffic has grown 10-12% annually.
• India’s domestic air passenger traffic reached a historic milestone, surpassing 5 lakh passengers in a single day in 2024.
• International routes also experienced substantial growth, with 64.5 million passengers carried between January and November 2024, marking an 11.4% increase.
• India boasts 13–18% of women pilots, which ranks among the highest globally.
  • The Directorate General of Civil Aviation (DGCA) targets 25% representation of women in all aviation roles by 2025.

Concerns 

• India’s aviation industry is poised for rapid growth, but experts caution that it faces challenges due to heavy reliance on imported components and a shortage of skilled talent, even as domestic carriers increase aircraft orders and air traffic rises.
• India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for the majority of the country’s population, of which nearly 40% is the upwardly mobile middle class.

Conclusion and Way Forward 

• The industry stakeholders should engage and collaborate with policymakers to implement efficient and rational decisions that would boost India’s civil aviation industry.
• With record passenger traffic, improved regional connectivity, and updated aviation frameworks, India is progressing toward becoming a major global aviation hub, supporting economic growth and the national goal of Viksit Bharat @2047.

Source :TH