Evaluating Rules and Regulations in The Indian Aviation

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Evaluating Rules and Regulations in The Indian Aviation
25 Sep 2021
7 min read

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A rather pleasing opening note, in the recent budget announcement (2020) the government was examining a proposal to hike the foreign direct investment limit in aviation; this would help the domestic aviation industry as a foreign partner to be able to pick up a bigger stake in a domestic carrier leading to the better valuation of the domestic player. The low penetration ratio also provides a big opportunity for investment in the Indian aviation sector. #ThinkWithNiche

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A rather pleasing opening note, in the recent budget announcement (2020) the government was examining a proposal to hike the foreign direct investment limit in aviation; this would help the domestic aviation industry as a foreign partner to be able to pick up a bigger stake in a domestic carrier leading to the better valuation of the domestic player. The low penetration ratio also provides a big opportunity for investment in the Indian aviation sector. 

The aviation industry is a well-functioning bubble in itself that complies with the demand of the nation. The government has been encouraging private sector participation in this industry. Foreign investment up to 49% is allowed under automatic route in scheduled air transport service, regional air transport service and domestic scheduled passenger airline. In fact, 100 % FDI under automatic route for Greenfield projects, whereas, 74% FDI is allowed under automatic route for brownfield projects is also admissible. Also, 100% FDI is allowed under automatic route in scheduled air transport service, regional air transport service and domestic scheduled passenger airline. There has also been an approval of 49% of FDI in aviation for foreign carriers.

As for tax and duties, there is 100% tax exemption for airport projects for a period of 10 years. Indian aircraft Manufacture, Repair and Overhaul (MRO) service providers are exempted completely from customs and countervailing duties. Before you seek a license, you need to get a no objection certificate (NoC) from the civil aviation ministry. The ministry studies the promoter’s background before issuing an NOC, based on which operators can lease an aircraft or place an order with aircraft manufacturers like Airbus or Boeing.

The strategies and policies initiated by the government has only aided this process. A budget of about US$ 14.98 million has been allocated to Airports Authority of India, of which US$ 4.29 million has been attributed towards Pakyong, Sikkim project. The government has also supported the Bureau of Civil Aviation Security with US$ 9.71 million to meet their expenditure. 
These pointers were put forward to give a glimpse of what the regulations, policies, government role would look like once you enter this industry. You might not necessarily want to launch your own airline. You could always consider being a pilot, air host or hostess, airline administrative support, operations agent, avionics technicians, regional sales manager, flight dispatcher, ground station attendant, aviation meteorologist and so much more. Your turn to decide now!