Indian Aviation Industry Moving Up the Value Chain, Welcoming FDI

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Posting the fastest full-year growth rate for three consecutive years, India is known as the world’s fastest-growing aviation market. In May 2018, India recorded a double-digit passenger growth for 45 continuous months.
According to the International Air Transport Association, the country’s Revenue Passenger Kilometre (RPK) rose to 16.6% in the month of May 2018. “Passenger demand has continued to be supported by strong growth in the number of airport connections within the country too; 22 percent more airport-pairs are scheduled to operate in 2018 compared to last year,” IATA said. 2018 is expected by IATA to be another year of above-trend passenger growth.

The new Aviation policies articulated by the Indian Government work towards grabbing the current opportunities in the Indian Aviation market and turning them into realities. Effective improvement in the infrastructure, regional connectivity, flexible flying norms for new entrants are all factors that attempt to capitalize on the growth prospects of the Indian Aviation market. While the growth in individual sector affects the overall growth of the country’s economy, the growth of the aviation market highly impacts the growth of the country’s MRO (Maintenance, Repair, and Overhaul) sector. Boeing Shanghai Aviation Services claimed that the global commercial aviation service sector is anticipated to witness a remarkable growth to $8.5 Trillion in the next 20 years.

Over the years, India’s Aviation defense requirements have observed a steady growth leading to a corresponding growth in the Defence Aviation MRO. Creating a bonanza of opportunities for the industry players, the combined MRO opportunities of the Defence and Civil Aviation market in India is expected to touch USD2.5 Billion by the year 2025. Due to this, industrial giants are looking to expand their international business in India. Established vendors to international manufacturers express their interest in setting up their plants to India where the global supply chain is in the making for multi-billion dollar domestic and export-oriented industries.

In addition to this, India holds a huge scope of growth in the design and engineering services related to components and assemblies to be given as services to original equipment manufacturers.

India is being talked about across the globe for catching the attention of major aerospace defense manufacturers with its low production cost and government’s focus on building the manufacturing sector under the country’s ‘Make in India’ initiative. Andrew Martin, the Director of business development and market at Martin-Baker Aircraft Company Ltd. said, “India has the attention of all the big aerospace defense manufacturers and ourselves as well.” “India is our second largest market for (pilot) ejection seats after the US,” added Martin whose family-owned company was rated as the 99th largest aerospace and defense supplier.

Currently, there are more than 80 international airlines that operate in India, building a network between the country and the rest of the world. The country is expected to be the third largest Aviation market in the world by the year 2020 and the largest one by 2030. The country’s Aviation sector is estimated to witness investments of around $15 Billion in between the financial years of 2016-17 to 2019-20. Out of this figure, $10 Billion is expected to come only from the private sector. The domestic passenger traffic in the country crossed the 100 million mark in the year 2017 and is expected to reach 106 million between January 2018 and November 2018. The management consulting firms in India are doing their in-depth market research in assisting the global aviation giants enter one of the fastest growing aviation markets, which is expected to cater to 478 million passengers by 2036.

[i] https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/india-records-double-digit-air-passenger-growth-for-45th-consecutive-month-in-may-iata/articleshow/64871421.cms
[ii] https://www.aviationpros.com/press_release/12359043/indian-aerospace-defence-mro-poised-for-a-vertical-take-off
[iii] http://www.mmindia.co.in/article/93/indian-aerospace-industry-on-a-high-growth-trajectory

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