This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 10/10/2018

Overview

Units: $ millions

 

2015

2016

2017

2018 (Estimated)

Government budget allocation

$824

$679

$795

$985

Total Exports

$3730

$3382

$2266

$2379

Total Imports

$4984

$8373

$7678

$8062

Imports from the US

$773

$965

$1511

$1260

Number of Passengers

190

224

265

318

Data Sources: Directorate General of Foreign Trade, Ministry of Civil Aviation, Global Trade Atlas

At $16 billion, India is the fastest growing and currently the ninth largest civil aviation market in the world. India's domestic aviation market is the second highest growing market in the world after China, and it is expected to become the third largest aviation market in the world after the United States and China. According to International Air Transport Association (IATA), a recent 20-year air passenger forecast estimated that India will overtake the UK to become the third largest market with 278 million passengers in 2025. This growth will create demand for new aircrafts, air navigation service technologies, airport security equipment, and increased infrastructure.

Govt. of India officials cite the correlation of every one percent increase in GDP with a two percent increase in India’s aviation sector. With India’s increasing GDP growth rate, we expect continuing large increases in its aviation sector growth. According to KPMG, India currently has one of the least penetrated aviation markets in the world with approximately 99 percent of Indians having never traveled by air and weak connectivity between metros and smaller cities.

The Ministry of Civil Aviation (MoCA) oversees the formulation of policies and programs for the development and regulation of the sector. It exercises administrative control over the Directorate General of Civil Aviation (DGCA), the Bureau of Civil Aviation Security (BCAS), the Indira Gandhi Rashtriya Udan Academy, the National Aviation Company of India Limited (Air India), Pawan Hans Helicopters Limited, and the Airports Authority of India (AAI). The Government in the 2018-19 budget has proposed a new scheme called the NextGen Airports for Bharat (NABH) Nirman (Build) to expand the existing airport capacity by more than five times to handle a billion passengers annually. In terms of budgetary allocation, the Aviation Ministry has been allocated nearly $963.6 million. Foreign Direct Investment (FDI) norms for the aviation sector allows 100 percent FDI into Indian airline operators under the automatic route.

MoCA released the National Civil Aviation Policy (NCAP) on June 15, 2016, which covers over 22 aspects of aviation and aims to enable a rapid growth of the sector, improve the ease of doing business, advance regional connectivity, and capture India’s largely untapped market of 300 million middle-class citizens through affordable services. A key component of the NCAP is UDAN ('Ude Desh ka Aam Naagrik'), a first-of-its-kind scheme to stimulate regional connectivity by adding flights to under-served locations at subsidized fares. The Government has received significant interest in bids for first two phases. Incumbent carriers expected to have 20-22 aircraft in UDAN by March 2019.

Another priority of the NCAP is the promotion of helicopter, seaplanes and general aviation to improve regional connectivity, tourism, law enforcement, and emergency medical evacuation. The NCAP will facilitate the development of at least four heli-hubs and Helicopter Emergency Medical Services. NCAP will also permit helicopters to fly from point to point without prior ATC clearance in airspace below 5,000 feet. Recently, the Aviation Ministry has directed the DGCA to design regulations on Commercial seaplane service. The government has also eased norms for charter planes to remove the pre-condition of receiving clearance from the DGCA for Indian registered charters or private jets to fly out of India. In the next phase, it may ease the process of foreign-registered business and charter jets flying to India.

MOCA has made several provisions in its recent budget towards developing India as a maintenance and repair overhaul (MRO) hub in Asia including: exemption from customs duties, improved clearance processes for imported parts and components, and enabling the facilitation of appropriate visas and temporary landing permits.

The NCAP also highlights improvements in code share agreements. Designated carriers in India can now enter into international and domestic codeshare routes with foreign carriers if the codeshares are in accordance with the existing Air Service Agreements provision, and they provide MoCA with 30-day prior notification. The policy also allows Open Skies agreements with SAARC countries and countries beyond 5,000 kilometers from New Delhi.

The FAA’s Aircraft Certification Service and India’s Directorate General for Civil Aviation (DGCA) maintain a Bilateral Aviation Safety Agreement with Implementation Procedures for Airworthiness (BASA IPA) to facilitate the exchange of aeronautical products between the two States.  Additionally, the FAA and India’s civil aviation Authorities continue to explore means by which to enhance cooperation.

The U.S. Transportation Security Administration (TSA) cooperates with MoCA and the Bureau of Civil Aviation Security (BCAS) through their annual bilateral Aviation Security Working Group meetings. TSA and BCAS share information and technology related to risk assessment, capacity development in security screening training, air marshal training, and other security concerns through the Sensitive Security Information (SSI) Memorandum of Agreement signed between U.S. and India in 2013.

Leading Sub-Sectors

Commercial and general and business aviation aircraft

India currently has fewer than 300 civilian helicopters, compared to 14,269 in the United States. Similarly, India has few small fixed-wing aircraft. With the increased interest to improve regional connectivity, tourism, and emergency medical evacuation, we see opportunity in the general aviation business aviation sub-sectors.

Maintenance Repair and Overhaul (MRO)

India’s young and growing fleet of airplanes will require future maintenance service. 90 percent of India’s MRO business carriers currently spent outside India, in Sri Lanka, Singapore, Malaysia etc. The GOI continues to try and develop the MRO sector in India.

Avionics, including communication systems & navigation

According to the NCAP, AAI is ranked among the top air navigation service (ANS) providers in the world. The upgradation and modernization of ANS in India is in line with global trends. With the launch of GPS Aided GEO Augmented Navigation (GAGAN), India has become the fourth country in the world to use satellite-based navigation systems.

Airplane and helicopter parts and components

India’s nascent mark Helicopter Emergency Medical Services (HEMS) holds large potential for global service providers. The increasing urbanization of major Indian cities marked by rapid and unplanned growth, along with high traffic density, makes the need for HEMS even more urgent.

Safety and security
As one of the fastest growing aviation markets in the world, India needs to meet the demands of this growth by ensuring it is implementing effective aviation safety and security at each of its airports.

Human resource development
With passengers and aircraft fleet likely to double by 2020, the human resource development infrastructure needs immediate strengthening. Unfortunately, the supply of skilled human resources has not kept pace with the rapid growth in demand.

Opportunities

With its increased interest in improving regional and remote air connectivity, the GOI is budgeting $110 billion in civil aviation expansion and modernization projects through 2020. KPMG recently estimated India would require over 250 brown field and green field airports. The government also plans to revive and operationalize around 160 airports in India by involving the private sector in the construction of airports through Public Private Partnerships (PPP), and providing substantial state support in terms of financing, concessional land allotment, tax holidays and other incentives. Recently, at the sixth U.S-India Aviation Summit, the government strongly requested U.S. construction companies and airport operators to play a major role in the existing and upcoming airport infrastructure.

There are several large airport projects happening throughout India. Delhi’s Indira Gandhi International Airport is currently undergoing a large expansion to increase its cargo and passenger handling capacity. GMR Airports Limited has commenced works for the construction of the Mopa International Airport in Goa. Phase I of the project is expected to be completed by May 2020. In addition, GVK is constructing the first terminal building and runway of Navi Mumbai International Airport Project in Mumbai.

Sources claim India is one of the fastest-growing markets for unmanned aerial vehicles (UAVs) and one of the top UAV importers for military purposes worldwide. According to BIS Research, by 2021, the Indian UAV market will reach $885.7 million, while the global market size will touch $21.47 billion. The government is planning to form a task force to suggest a roadmap for producing UAVs locally and in collaboration with foreign partners.

The U.S-India Aviation Cooperation Program (ACP)

The ACP was established in 2007 as a public-private partnership between the U.S. Federal Aviation Administration (FAA), the U.S. Trade and Development Agency (USTDA), and other U.S. government agencies and companies. The ACP supports the growth of the Indian civil aerospace sector by working directly with the GOI to identify and execute projects that encourage collaboration between U.S. and Indian stakeholders in aerospace technology and best practices.

U.S.-India Aviation Summit

The U.S. Trade and Development Agency, in partnership with the GOI and the U.S.-India Aviation Cooperation Program, recently held the sixth Aviation Summit in Mumbai May 9-11, 2018, promoting commercial opportunities in civil aviation and closer collaboration between the U.S. and Indian governments. During the Summit, U.S. companies completed nearly $300 million in commercial deals with the GOI. The Aviation Minister and the Secretary pitched the 22 percent year on year growth in India’s aviation sector as reason to invest and make aviation products in India. They further propose to collaborate with the U.S. to locally manufacture civil and defense aircraft. The Secretary sought more U.S. participation in the development of new airports and in the revamping of the existing airports, as well as cooperation in drone technology, manufacturing, and regulations.

 

Web Resources

Ministry of Civil Aviation http://www.civilaviation.gov.in/

Airports Authority of India (AAI) http://www.aai.aero/

Director General of Civil Aviation http://dgca.nic.in/

CAPA Centre for Aviation India http://www.capaindia.com/

International Air Transport Association http://www.iata.org/

US-India Aviation Cooperation Program http://us-indiaacp.com/

Ministry of Defense http://www.mod.nic.in/

For more information about opportunities in this sector contact U.S. Commercial Service Industry Specialist: Nisha Wadhawan at Nisha.wadhawan@trade.gov 

 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



India Aerospace and Defense Trade Development and Promotion