This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/5/2019

Overview
Units: $ millions  HS code: 880000

 

2016

2017

2018

2019 (estimated)

Government budget allocation

$679

$795

$645

$677

Total Exports

$3382

$2264

$1548

$1625

Total Imports

$8373

$7678

$6618

$6949

Imports from the US

$965

$1511

$2639

$3417

Number of Passengers (domestic)

 85.20 million(21.58)
% change over previous year)

103.75 million
(21.77)
% change over previous year)

123.32 million (18.86)
% change over previous year)

150 million

Data Sources:  Ministry of Civil Aviation, Ministry of Commerce & Industry, Directorate General of Civil Aviation, USDOC, Bureau of the Census – Foreign Trade Division

India’s civil aviation market, the third-largest in the world after China and the United States, is expected to continue to grow rapidly. Civil aviation is a $30 billion sector making up 1.5 percent of the economy, supports 7.5 million jobs, while domestic passenger traffic has grown at double digit rates for 50 consecutive months and was up 18.6 percent last year. Passenger demand is expected to triple to 500 million journeys in the next 20 years (International Air Transport Association, 2018).  India’s rapid aviation growth is expected to drive demand for 2,300 aircraft worth US$320 billion over the next 20 years, according to Boeing.

The Ministry of Civil Aviation (MoCA) is the primary regulatory authority for the aviation sector, and it oversees the Airports Authority of India (AAI), Directorate General of Civil Aviation (DGCA), Bureau of Civil Aviation Security (BCAS), Air India, and Pawan Hans Helicopters Limited.

India has a 20-year roadmap to develop civil aviation and envisions a five-fold increase in airports to handle over a billion trips a year.  The “Vision 2040” document outlines development needs for the sector. 

The Ministry of Civil Aviation released the National Civil Aviation Policy (NCAP) in 2016 to promote rapid growth of the sector, improve the ease of doing business, advance regional connectivity, and open flying opportunities to India’s largely untapped market of 300 million (and growing) middle-class citizens.  A key component of the NCAP is UDAN ('Ude Desh ka Aam Naagrik'), a new initiative including a regional connectivity scheme (RCS) to add routes and flights to under-served locations at subsidized fares.  In the third round of RCS bidding, the Ministry of Civil Aviation awarded 279 routes including water aerodromes. In August 2018, the Ministry released a draft International Air Connectivity (IAC) scheme/ “International UDAN” scheme to promote international connectivity with Asian countries.  

The NCAP aims to improve code share agreements. Designated carriers can now enter into international and domestic codeshares with foreign carriers if the codeshares are in accordance with existing Air Service Agreements provisions. 

The FAA’s Aircraft Certification Service and DGCA maintain a “Bilateral Aviation Safety Agreement with Implementation Procedures for Airworthiness” (BASA IPA) to facilitate the exchange of aviation products. The FAA and India’s civil aviation authorities continue to explore expanded cooperation.

The U.S. Transportation Security Administration (TSA) cooperates with MoCA and BCAS through bilateral Aviation Security Working Group meetings.  TSA and BCAS share information related to risk assessment, capacity development, air marshal training, and other security issues through a bilateral Sensitive Security Information (SSI) Memorandum of Agreement signed in 2013.

The Airports Authority of India (AAI) owns about 125 airports and is one of the largest airport operators in the world.  Out of 449 total airports and airstrips across India, only about 100 are considered fully operational. 

India’s civil aviation sector faces challenging capacity constraints including insufficient airports to meet current demand, unsuccessful attempts to privatize airports or attract greenfield investment due to lack of profitability, construction delays, ambiguity in procurement processes, lengthy environmental reviews, land acquisition issues, etc.  India tried and failed to privatize Air India and Pawan Hans, and further attempts are expected.

Domestic airlines continue to struggle due to hyper-competitive pricing, high fuel costs, and volatile currency rates. These market challenges led to the fall of Jet Airways in 2019, India’s largest airline less than 10 years ago.

India is working to attract Foreign Direct Investment (FDI) in the civil aviation sector.  100 percent FDI is allowed for civil aviation infrastructure, while any airline stake greater than 49 percent require government approval.

Leading Sub-Sectors
Commercial, and general and business aviation aircraft
India operates fewer than 300 civilian helicopters, compared to over 14,000 in the United States.  Similarly, India has few small fixed-wing aircraft.  With increased interest in developing regional connectivity, tourism, and emergency medical evacuation, opportunities are expected in these sectors. 

Maintenance Repair and Overhaul (MRO)
India’s growing fleet of airplanes will demand more maintenance services.  90 percent of India’s MRO business currently occurs outside India, especially in Sri Lanka, Singapore and Malaysia.  India continues to try to develop the MRO sector. 

Avionics, communications, and navigation
According to NCAP, the Airports Authority of India (AAI) is ranked as a top global air navigation service (ANS) provider.  AAI continues to upgrade and modernize air navigation services.  With the launch of the GPS Aided GEO Augmented Navigation (GAGAN) system, India became the fourth country in the world to implement satellite-based navigation systems.

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

Safety and security
Airport and aviation safety and security are a top Indian priority for each airport and throughout the industry. There are many opportunities for safety and security equipment and solutions in all aspects of the aviation industry.

Human resource development
Training, skilling, and human resource development is another government and industry priority.  The supply of skilled human resources has not kept pace with the aviation industry’s rapid growth. There are opportunities for education and training service providers in all aspects of the aviation industry. 

Remotely piloted aircraft (RPA), drones
India sees great potential and aims to develop opportunities for drones and remote aircraft.  By 2021, India’s UAV market is expected to surpass $800 million, according to BIS Research. In 2018, the DGCA released the first Drone Regulations, and these enabled visual line-of-sight (VLOS) daytime-only operations under 400 feet.  The Digital Sky Platform is an online system rolled out to register pilots, devices, service providers and implement a “no permission, no takeoff” (NPNT) rule. Revised drone regulations (2.0) are expected to be released in 2019, and these may enable beyond-VLOS operations and the delivery of payloads. 

Opportunities
As India builds greenfield and brownfield airports, over next 10 years, there will be growing opportunities in airport planning and development, sustainable airports, safety and security, body scanners, ICT and digital systems etc.   Policy reforms, such as including aviation turbine fuel in the Goods and Services Tax (GST), would create opportunities for U.S. investment to address India’s shortage of Maintenance Repair Operations (MRO) facilities.  The public-private U.S.-India Aviation Cooperation Program (ACP) actively works to build cooperation on aviation issues and opportunities, such as addressing India’s skills gap for pilots, air traffic controllers, and airport operators.   The United States and India have been discussing a potential Memorandum of Agreement between the Federal Aviation Administration (FAA) and Ministry of Civil Aviation that would increase opportunities for greater cooperation in developing, modernizing, operating, and maintaining civil aviation infrastructure.

Large airport expansion projects include Delhi’s Indira Gandhi International Airport which is currently undergoing an expansion to increase its cargo and passenger handling capacity. The second airport for the National Capital Region is planned at Jewar in Uttar Pradesh.  Second airports are being planned for Mumbai, Goa, Vizag and Pune.  Work on upcoming Navi Mumbai and Mopa airport in Goa is on.  The Bhogapuram airport near Vizag is at the bidding stage and likely to commence construction in 2019.  A new international airport at Kannur in north Kerala was commissioned in December 2018.  All major airports are supplementing airside and terminal capacity to meet demand.

Boeing, Airbus, Lockheed Martin, Bombardier, and other leading OEMs consider India as an important global market with high demand for aircraft, having strategic geographic location, engineering expertise and competitive labor cost.  The companies are partnering with Indian suppliers, especially with MSMEs to fulfill needs of their Tier-1 suppliers and set up an aircraft manufacturing ecosystem within the country. 

The U.S-India Aviation Cooperation Program (ACP)
The U.S.-India Aviation Cooperation Program is a public-private partnership between the U.S. and Indian governments and U.S. companies that advances aviation cooperation and business opportunities. It was established in 2007 with the support of the U.S. Federal Aviation Administration (FAA), the U.S. Trade and Development Agency (USTDA), the U.S. Department of Commerce, the State Department, and other U.S. government agencies .  The ACP supports growth of Indian civil aerospace sector by working directly with the Indian aviation authorities to identify and execute projects that encourage collaboration between the U.S. and Indian stakeholders in aerospace technology and best practices.  http://us-indiaacp.com/ 

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

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/
International Air Transport Association  http://www.iata.org/
CAPA Centre for Aviation India  http://www.capaindia.com/
US-India Aviation Cooperation Program http://us-indiaacp.com/
IATA Report on India’s Air Transport Sector, 2018
Summary: https://www.iata.org/pressroom/pr/Pages/2018-09-04-02.aspx
Full report: https://www.iata.org/publications/economics/Reports/India-aviation-summit-Aug18.pdf

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.