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Civil Aviation - A Booming Sector


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An estimated investment of US $9 billion to be pumped in by the year 2012. The following are the facts and figures related to the Indian Aviation Industry.


-India has 454 airports and airstrips; of these, 16 are designated international airports.

-In 2006-07, Indian airports handled an estimated 95 million passengers and 1.5 million tonnes of cargo.

-Passenger traffic grew in excess of 30% in 2006-07 over 2005-06; Cargo grew at 11% over the previous year.


-Currently 97 airports are owned and operated by the Airports Authority of India(AAI).

-The Government aims to attract private investment in aviation infrastructure.

-Mumbai and Delhi airports have been privatized and are being upgraded at an estimated investment of US$4 billion over 2006-16.

-Greenfield airports at Bangalore and Hyderabad are being built by private consortia at a total investment of over US$800 million.

-Second Greenfield airport being planned at Navi Mumbai to be developed using PPP mode at an estimated cost of US$2.5 billion.

-35 other city airports proposed to be upgraded - city side development to be undertaken through PPP mode where an investment of US$357 million is being considered over the next 3 years.

-India now has 12 airlines including the national carriers Air India and Indian

Indian private airlines - Jet, Kingfisher, Spicejet, Go - accounted for around 70% of the domestic passenger traffic in 2006. Some have started international flights.


-100% FDI is permissible for airports; FIPB approval required for FDI beyond 74%.

-100% FDI under automatic route is permissible for greenfield airports.

-49% FDI is permissible in domestic airlines under the automatic route, but not by foreign airline companies.

-100% equity ownership by Non-Resident Indians (NRIs) is permitted.

-AAI Act amended to provide legal framework for airport privatisation.

-100% tax exemption for airport projects for a period of 10 years.

-Indian Govt. plans to set up an Airport Economic Regulatory Authority to provide a level playing field to all players.

-'Open Sky’ Policy of the Government and rapid air traffic growth have resulted in the entry of several new privately owned airlines and increased frequency/flights for international airlines.

-74% FDI permissible in cargo and non scheduled airlines.


-Passenger traffic is projected to grow at a CAGR of over 15% in the next 5 years.

-Expected to cross 145 million passengers p. a. by 2010.

-Vision 2020 envisages creating infrastructure to handle 280 million passengers by 2020.

-Investment opportunities of US$110 billion envisaged up to 2020 with US$80 billion in new aircraft and US$30 billion in development of airport infrastructure.

-Associated areas like MRO and training offer high investment potential.

-Cargo traffic to grow at over 20% p. a. over the next five years and is expected to cross 3.3 million tonnes by 2010.

-Major investments planned in new airports and upgradation of existing airports.


-Favourable demographics and rapid economic growth point to a continued boom in domestic passenger traffic and international outbound traffic.

-International inbound traffic will also grow rapidly with increasing investment and trade activity and as India's rich heritage and natural beauty are marketed to international leisure travellers.

-Consequent high demand for investments in aviation infrastructure.


-Greenfield airport projects in resort destinations and emerging metros such as Kannur, Goa, Pune, Navi Mumbai, Ludhiana, etc.

-Cityside development opportunities for upgradation of 35 non-metro airports.

-About 25 regional greenfield/unutilised airports likely to be bid out for private development.

Dharmendrasinh Rathod


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