India Country Market
Insights and Opportunities
Overview: With a growth rate of 18 percent per annum, the Indian aviation sector was worth $5.6 billion in early 2008. From being primarily a government-owned industry, the Indian aviation industry is now dominated by privately owned, full service airlines and low-cost carriers. In a recent report, industry sources predict that by 2012 domestic traffic will increase by 25 percent and international traffic will grow by 15 percent. By 2020, the Indian airports are expected to handle around 100 million passengers including 60 million domestic passengers and estimated 3.4 million tons of cargo per annum. Currently India has 310 aircrafts with another 480 on order. These new aircrafts should be ready for delivery in 2012.
Opportunities: To ensure that the development of the sector was not restricted to the metro cities alone, the GOI announced its plans to upgrade 35 non-metro airports into world-class entities at an estimated cost of $1.3 billion. The airports to be modernized include Coimbatore, Tiruchi, Thiruvanthapuram, Vishakapatnam, Port Blair, Mangalore, Agatti and Pune. The airports in Mumbai, Delhi, Bangalore and Hyderabad have already been privatized and are being upgraded at an estimated investment of $4 billion over 2006-2016. A Greenfield airport is in operation at Bangalore and the one at Hyderabad will be operational soon. The International Civil Aviation Organization (ICAO) has also approved Greenfield airports at Navi Mumbai, Goa, Pune, Kannur and Nagpur. The Navi Mumbai greenfield airport is going to be developed using a public-private partnership at an estimated cost of $2.5 billion.
The Federal Ministry of Civil Aviation is the governing Indian agency for this sector. The 2008-2009 ministry budget was estimated at $2 billion. The Airports Authority of India (AAI) is the largest airport owner in India and governs all Indian airports, with a budget of $675 million for 2008-09. AAI manages 126 airports, which include 11 international airports, 89 domestic airports and 26 civil enclaves at defense airfields.
The most promising sub-sectors in the airport equipment and ground-handling services continue to be technology-driven communication and ground services. The Airports Authority of India (AAI) has an annual budget of approximately $100 million for procurement of equipment that is dependent on foreign technology. The Ministry of Civil Aviation and the Federal Aviation Authority of the United States signed a Memorandum of Agreement paving the way for technical assistance from the United States on a host of aviation-related matters. This is expected to provide opportunities for American companies in the Indian aviation sector.