Soaring Towards 2047: India’s Aviation Sector as a Pillar of Viksit Bharat

03 Jun Soaring Towards 2047: India’s Aviation Sector as a Pillar of Viksit Bharat

This article covers “Daily Current Affairs” and the Soaring Towards 2047: India’s Aviation Sector as a Pillar of Viksit Bharat

SYLLABUS MAPPING: 

GS-3- Economic-  Soaring Towards 2047: India’s Aviation Sector as a Pillar of Viksit Bharat

FOR PRELIMS

What is the UDAN scheme? Why is the aviation sector important for India’s economy?

FOR MAINS

What are the main problems faced by the aviation industry in India?

Why in the News? 

India hosted the IATA AGM for the first time in 42 years, marking a significant milestone in the country’s aviation history. The event brought together over 1,600 global aviation leaders, emphasising India’s growing influence in the worldwide aviation landscape.

Aviation sector:

1. Passenger Traffic and Growth: Data on domestic air passenger traffic reaching approximately 165.7 million in FY25, with a 7.8% year-on-year increase, is from ICRA and reported by Financial Express and Mathrubhumi. Projections for continued 7–10% annual growth and expectations of 164–170 million passengers in FY25 are also attributed to ICRA.
2. Market Position: India’s status as the world’s third-largest domestic aviation market and plans for 350 airports by 2047 are cited by Economic Times, referencing statements from the Civil Aviation Minister at the IATA Global Aviation Summit 20252.
3. Aircraft Fleet and Orders: The ongoing expansion of airline fleets, including an order book of nearly 1,900 aircraft and continued weekly additions by major carriers, is detailed in ICRA and Alton Aviation Consultancy reports
4. Airport Infrastructure: The push for infrastructure growth, including the setup of 150 new airports and a target of 350 airports by 2047, is highlighted by the Economic Times and Alton Aviation Consultancy
5. Industry Challenges and Financials: The sector’s operational and financial challenges, including supply chain issues, engine reliability problems, and projected industry losses of ₹2,000–3,000 crore for FY25 and FY26, are discussed in Financial Express, Mathrubhumi, and Evrim Ağacı, all citing ICRA
6. Long-Term Potential: OAG’s aviation market analysis outlines the historical and projected growth rates for domestic and international capacity, emphasising the opportunity for further expansion in both segments

International Air Transport Association (IATA)

Importance of Air Transport for the Indian Economy

1. Major Economic Contributor: The Indian aviation industry contributes $53.6 billion annually to the national economy, accounting for 1.5% of the country’s GDP. This makes it a significant driver of economic growth and development.
2. Employment Generation: The sector supports approximately 7.7 million jobs, both directly and indirectly, across the country, highlighting its vital role in job creation.
3. Boosts Tourism and Trade: Aviation is essential for tourism, which itself accounts for 6.5% of India’s GDP and 8.9% of total employment. International tourists, who primarily arrive by air, contribute $29.4 billion annually through local purchases, supporting a wide range of businesses and services.
4. Facilitates Investment and Global Competitiveness: Enhanced air connectivity increases India’s competitiveness, productivity, and attractiveness for investment and trade, linking the country more effectively to global markets.
5. Enables Industry Growth: The aviation sector also drives growth in related industries such as aircraft manufacturing, maintenance, repair, and overhaul (MRO), with India targeting a $4 billion share of the global MRO market by 2031.

Role in Strengthening Ties Between Cities

1. Improved Connectivity: Air transport connects over 100 Indian cities, significantly reducing travel times and making business, education, and healthcare more accessible to people across the country.
2. Economic Integration: By linking metropolitan centres with tier-2 and tier-3 cities, aviation promotes balanced regional development and facilitates the movement of goods, people, and ideas.
3. Growth of Regional Economies: The expansion of airports and new air routes, especially through government initiatives like the UDAN scheme, has unlocked economic potential in previously underserved regions, fostering local entrepreneurship and job creation.
4. Support for National Initiatives: The government’s plan to increase the number of airports to over 350 by 2047 aims to further strengthen intercity ties and support the vision of a developed and integrated India.

Government Initiatives in Indian Air Transport

1. UDAN Scheme- Boosting Regional Connectivity: Launched in 2016, UDAN aims to make air travel affordable by connecting underserved and unserved airports. As of 2024, 625 routes have been operationalized, linking 90 airports, including 2 water aerodromes and 15 heliports, benefiting over 1.49 crore passengers.
2. Airport Infrastructure Expansion: The government plans to invest ₹92,000 crore (~US$11 billion) to develop 50 new airports, targeting 350 operational airports by 2047 to meet rising aviation demand.
3. MRO Sector Development: To make India a global MRO hub, GST on domestic services was reduced from 18% to 5%, and 100% FDI is allowed. The sector aims to grow into a $4 billion industry by 2030.
4. Promotion of Sustainable Aviation Fuels (SAF): India is promoting SAF adoption to cut carbon emissions. Partnerships like Boeing-HPCL aim to scale production and implement sustainable aviation standards.
5. Air Cargo Infrastructure Strengthening: Under the National Civil Aviation Policy (2016), the Air Cargo Logistics Promotion Board was set up to reduce dwell times and streamline cargo operations.
6. Aircraft Leasing Reforms – GIFT City: Reforms at GIFT City support domestic aircraft leasing and financing, aligned with the Cape Town Convention, to lower leasing costs and reduce foreign dependency.
7. Digi Yatra – Seamless Travel Experience: This initiative uses facial recognition for paperless and contactless airport travel, improving passenger convenience, security, and efficiency.
8. Gender Inclusivity in Aviation: Aiming for 25% female workforce by 2025, the government promotes scholarships, flexible work policies, and training programs to support women in aviation.

Major Challenges Faced by the Sector

1. High Operational Costs: Indian airlines face high costs, especially due to elevated aviation fuel taxes, making operations less profitable.
2. Regulatory and Tax Issues: Uncertainty in tax structures and frequent regulatory changes complicate financial planning for airlines.
3. Infrastructure Constraints: Rapid growth in passenger numbers has outpaced the development of airport and air traffic control infrastructure, particularly in smaller cities.
4. Supply Chain Disruptions: Delays in aircraft and engine deliveries, as well as shortages of spare parts, have led to a portion of the fleet being grounded.
5. Market Concentration: A few major airlines dominate the market, which can limit competition and innovation.
6. Manpower Shortages: There is a shortage of skilled professionals such as pilots, engineers, and cabin crew, leading to operational disruptions.
7. Low Per Capita Air Travel: Despite growth, the number of air travelers per capita in India is still low compared to other large economies.
8. Outdated Regulations: Some aviation laws and policies are outdated and do not reflect the current needs of the industry.
9. Air Cargo Limitations: Dominance of Foreign Carriers: 90–95% of international cargo is handled by foreign airlines, highlighting the need for a level playing field for Indian operators

Way Forward

1. Reform Taxes and Regulations: Simplifying and rationalizing aviation fuel taxes and GST can reduce costs and regulatory burdens.
2. Invest in Infrastructure: Accelerating the construction and modernization of airports and air traffic systems, especially in smaller cities, will support future growth.
3. Support Domestic Industry: Expanding incentives for local aircraft manufacturing and MRO services can lower costs and create jobs.
4. Focus on Sustainability: Investing in sustainable aviation fuels and green airport infrastructure will help the sector meet global environmental standards.
5. Develop Human Resources: Training more pilots, engineers, and crew members is essential to address manpower shortages.
6. Encourage Competition: Supporting new entrants and fostering competition can improve service quality and innovation.
7. Update Regulations: Modernizing aviation laws to match global standards will help the industry adapt to new challenges and opportunities.

Conclusion

India’s aviation sector stands as a cornerstone of the nation’s economy and a pivotal pillar in the vision of ‘Viksit Bharat’ by 2047. It fuels economic growth and connectivity by contributing approximately $53.6 billion to the GDP and supporting around 7.7 million jobs. With plans to expand to 350 airports and accommodate up to 3.5 billion passengers annually by 2047, the sector is poised for significant growth. Government initiatives like the UDAN scheme and investments in sustainable aviation underscore this commitment. As India advances towards becoming a $30 trillion economy, a robust aviation industry will be instrumental in achieving inclusive and sustainable development.

Source: https://ddnews.gov.in/en/pm-modi-highlights-indias-aviation-boom-at-iatas-81st-annual-general-meeting

Prelims Questions

Q. Consider the following statements regarding the International Air Transport Association (IATA):
1. IATA is a global trade association representing airlines.
2. India has hold the IATA meetings for the first time in 2025.
3. IATA’s core functions include developing industry standards, advocating for fair regulations, and organising the World Air Transport Summit (WATS).
Which of the above statements is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

ANSWER: C

Mains Questions

Q. Discuss the key challenges confronting the Indian air transport sector and analyse the policy recommendations proposed by various expert committees to address these issues.

                                                                                                                                                         (250 words, 15 marks)