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India set to emerge as World’s 3rd Biggest Civil Aviation Market by 2024: Union Minister Hardeep Singh Puri

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India will be world's 3rd biggest civil aviation sectorDuring the India Aircraft Leasing Summit-2021, Minister of State (I/C) for Civil Aviation, Hardeep Singh Puri stated that India is set to emerge as World’s 3rd Biggest Civil Aviation Market in overall terms by 2024.  Union Finance Minister, Nirmala Sitharaman was the Chief Guest & Hardeep S Puri was the Guest of Honour at the summit.

  • The India Aircraft Leasing Summit 2021 was held at Vigyan Bhavan Convention Centre, New Delhi on February 26, 2021. It was held in both physical & virtual modes.
  • The theme of the summit was ‘Rupee Raftaar’.
  • Organizers – Ministry of Civil Aviation & IFSC (International Financial Services Centres) Authority in collaboration with GIFT (Gujarat International Finance Tec)- City & FICCI (Federation of Indian Chambers of Commerce & Industry).

Key Points from Hardeep S Puri’s address

Growth Potential

In order to keep up with the growth potential of Indian aviation sector, in the next 20 years

  • India needs 1, 750 – 2, 100 aircrafts valued at over INR 20, 40, 000 Crore.
  • With estimated 100 deliveries each year (i.e about INR 35, 000 crore) of finance each year as per predictions of Airbus & Boeing.
  • Globally, the leasing of aircrafts has increased dramatically from 2% in 1980 to 41% in 2018. It is estimated to reach 50% in 2020.

Profitable Segments

  • The Civil Aviation Minister highlighted that Aircraft Leasing is the most profitable segment of the Aviation value chain, but at present not even 1 aircraft has been leased from India
  • India is taking several steps to develop Aviation leasing & Financing Hubs in India which includes Financing, MRO (Maintenance, Repair & Overhaul), manufacturing to expand this business in India.

IFSCA as Unified Regulator

IFSCA (International Financial Services Centre Authority) has been established in India as a unified regulator for promoting ease of doing business in IFSC & for regulations.

Creating an Efficient system for Aircraft Leasing & Financing

India has created a highly effective system for aircraft leasing & financing which is comparable to systems of Ireland, China, HongKong, Singapore.

  • Objective – To assist the growth of India’s financing market which will be critical to development of the aviation industry.

It will provide several benefits like

  • Creation of an aviation financing system which supports financing of airport development as well as the Make-in India initiative for manufacturing of aircraft, helicopters, drones, air taxis etc.
  • Develop new line of business in India for International Financial Services
  • Add India on map of global financial centres for International Financial Services
  • Generation of additional revenue for collection of taxes from ancillary industries & eventually through aircraft financing.
  •      Reducing Foreign exchange outgo

Note – India is the world’s second largest defence importer and third largest military spender.

Boosted by Union Budget 2021-22

In the Union Budget 2021-22, a Tax Holiday on capital gains & tax exemption for aircraft lease rentals paid to foreign lessors for doing so in GIFT City, Ahmedabad was announced.

  •   This has prompted many international & domestic companies to start aircraft leasing business in GIFT City, Ahmedabad.

Recent Related News:

i.On November 25, 2020, Indian Navy inducted two ‘MQ-9B Sea Guardian’ unarmed drones procured from the United States on lease. MQ-9B Sea Guardian became the first defence hardware to be procured on lease under the new Defence Acquisition Procedure (DAP) 2020.

About Ministry of Civil Aviation:
Minister of State (I/C) –  Hardeep Singh Puri (Rajya Sabha MP representing the state of Uttar Pradesh)