Investment Prospects in India's Aviation Industry

The aviation industry in India

It is quickly growing, fueled by increasing demand and robust government backing via strategic poliies.

This change has positioned India as the third-largest domestic aviation market globally, following the U.S. and China.

Government programs have been instrumental in modernizing and strengthening the industry, establishing it as a significant contender in the global aviation arena.

Government Actions

Parliament approved the Protection of Interest in Aircraft Objects Bill, 2025, bringing India’s aviation leasing regulations in line with international norms to lower leasing expenses.

The Bharatiya Vayuyan Adhiniyam 2024 updated India's aviation industry, superseding the colonial-era Aircraft Act of 1934.

As it enters its 9th year, the UDAN scheme has effectively activated 619 routes and 88 airports, intending to grow to 120 more destinations.

UDAN Yatri Cafés opened at Kolkata and Chennai Airports, offering travelers access to quality food at reasonable prices.

The swift expansion of aviation infrastructure persisted, achieving noteworthy advancements in making Greenfield airports operational and enhancing current facilities throughout the country.

An even 5% Integrated Goods and Services Tax (IGST) rate has been implemented for aircraft components to enhance India's standing as a competitive worldwide Maintenance, Repair & Overhaul (MRO) center.

The automatic route for 100% Foreign Direct Investment (FDI), along with GST cuts and tax simplification initiatives, has boosted India’s MRO industry.

Advancement

Each year, the total count of air travelers has surpassed 350 million, solidifying India’s position as the third-largest aviation market in the world.

In the last ten years, domestic air passenger traffic has increased by 10-12% each year.

India's domestic air travel hit a record high, exceeding 5 lakh passengers in one day in 2024.

International routes also saw significant expansion, carrying 64.5 million passengers from January to November 2024, which represents an 11.4% rise.

India has 13–18% of women pilots, placing it among the top in the world.

Worries

India's aviation sector is set for significant expansion, yet analysts warn of obstacles stemming from its dependence on foreign parts and a lack of skilled workforce, even as local airlines boost aircraft purchases and air travel grows.

India’s aviation sector remains largely unexplored, presenting significant growth prospects, given that air travel remains costly for most of the populace, of which almost 40% belongs to the rising middle class.

Conclusion and Next Steps

Industry stakeholders ought to work together with policymakers to make effective and logical choices that would enhance India’s civil aviation sector.

With unprecedented passenger traffic, enhanced regional connectivity, and modernized aviation frameworks, India is advancing toward its goal of being a prominent global aviation center, fostering economic growth and the national vision of Viksit Bharat @2047.