India’s aviation sector is undergoing a transformative phase with rising demand and expanding infrastructure, supported by ongoing government initiatives. The sector is witnessing the opening up of multiple opportunities for growth and investment. Existing areas such as maintenance, repair and overhaul (MRO), and aircraft leasing and financing are gaining traction with the rising fleet of aircraft. Further, new domains such as seaplanes and electric vertical take-off and landing (eVTOL) aircraft are also making headway, aiming to enhance air mobility within the country.
Strengthening India’s MRO ecosystem
India’s aircraft fleet has grown from around 400 aircraft in 2014 to over 800 aircraft currently. With the fleet size expected to notably rise, backed by recent massive orders from airlines including Air India, IndiGo and Akasa Air, the need for robust domestic MRO services has never been greater. This significant increase in fleet size will drive the demand for a strong MRO ecosystem, crucial for sustaining the aviation sector’s growth. Consequently, the market size of India’s MRO industry is expected to double, growing from $2 billion to $4 billion by 2031. Multiple other factors, including cost savings, faster turnaround times and enhancement of domestic expertise in the sector, drive the growing demand for domestic MRO services. It is also driven by the fact that a notable portion of MRO requirements in India are currently imported.
To tap the potential, the government is playing a pivotal role in implementing reforms and initiatives to transform India into a global MRO hub and leveraging India’s favourable geographical location. In July 2024, a unified goods and services tax rate of 5 per cent for all aircraft and engine parts was announced. Customs duty exemptions on tools and toolkits have also been announced among other measures. These moves will reduce the costs for MRO providers and simplify taxation. Additionally, the allowance of 100 per cent foreign direct investment through the automatic route would likely attract international players to set up operations in India. The government is also exploring extending the production-linked incentive scheme to the MRO sector to accelerate its development.
Private and global entities have shown enthusiastic responses to these changes. In September 2024, the Air India Group initiated the construction of a mega MRO facility in Bengaluru. It would cater to the needs of both base maintenance and line maintenance. It would also feature a mega hangar that can service wide-body and narrow-body aircraft.
With continuous policy support and growing participation from domestic and international players, India’s MRO sector is set for exponential growth, aligning with the government’s ambitious vision of establishing the country as a global hub for MRO.
Seaplanes connecting remote areas in India
Seaplanes are emerging as a promising mode of transportation to connect India’s most remote, hard-to-reach and underserved areas. With its vast natural resources of over 1,300 islands, more than 7,000 km of coastline and abundant rivers and lakes, India is uniquely positioned to benefit from seaplane operations.
Recent developments reflect the government’s efforts in exploring seaplane deployments to seamlessly connect remote locations.
In August 2024, the government introduced simplified guidelines for seaplane operations. These include allowing operations under a non-scheduled operator permit and streamlining the certification process. These relaxed norms aim to encourage participation under the regional connectivity scheme, RCS UDAN, to ensure connectivity to remote areas.
In November 2024, seaplane demonstrations were conducted in the country. De Havilland Aircraft of Canada Limited’s aircraft landed in Ahmedabad and made its way from Vijayawada to Mysore, Lakshadweep and Shillong. Technical demonstrations were also carried out at the Andaman & Nicobar Islands. Additionally, plans are under way for the development of seaplane connectivity in the union territory between Port Blair and other islands. Recent seaplane landings were also witnessed at the Bolgatty waterdrome in Kerala and Pandu Ghat in Guwahati, Assam.
The government is also planning collaborations between local manufacturers, such as Hindustan Aeronautics Limited (HAL) and Mahindra Aerospace, to develop and build these aircraft domestically.
Private players are stepping up for seaplane operations as well. SpiceJet has announced plans to launch seaplane services in 2025 on 20 routes, including Lakshadweep, Hyderabad, Guwahati and Shillong. It has also partnered with De Havilland Aircraft to conduct trial operations. Other domestic operators such as Maritime Energy Heli Air Services Private Limited (Mehair) and Heritage Aviation have expressed interest in entering the sector, while global manufacturers such as De Havilland Aircraft and Cessna are expected to participate, further expanding the market potential.
With strategic government support and private sector initiatives, seaplanes can transform regional connectivity in India, providing faster, more efficient travel options and unlocking the economic potential of remote regions.
Transforming urban mobility with eVTOL aircraft
Another form of connectivity that is set to emerge in the coming years is the eVTOL aircraft. These aircraft would drastically reduce the travel time within metropolitan cities, where congestion or time constraints often hinder road travel.
The government is actively supporting this new technology. In September 2024, the Directorate General of Civil Aviation (DGCA) released guidelines for vertiports for these eVTOL aircraft. The DGCA also issued an advisory circular outlining baseline airworthiness criteria for the type certification of these vertical take-off-and-landing capable aircraft. This initiative aims to streamline the certification process, while ensuring the safety and reliability of eVTOL technologies.
Recently, Sarla Aviation signed a statement of collaboration with Bangalore International Airport to explore advanced air mobility solutions. Electric flying taxis are planned to be launched. These eVTOL aircraft are expected to reduce the travel time dramatically; for example, cutting down the travel time from Bengaluru airport to Electronics City to 19 minutes from 150 minutes usually taken by road transport. Further, BluJ Aerospace conducted a trial run of its eVTOL, reportedly the largest privately built aircraft in India. The company plans to launch its first hydrogen-electric propulsion-powered cargo flight by 2026, with passenger flights expected to follow by 2030.
Apart from emerging start-ups in the segment, established players such as IndiGo are exploring these opportunities. InterGlobe Enterprises entered into an MoU with Archer Aviation to launch and operate an air taxi service in India by 2026.
Focus on domestic manufacturing
India’s civil aircraft manufacturing market remains in its nascent stages. However, the government is actively promoting initiatives to attract global aviation giants to establish domestic manufacturing operations. While full-scale commercial aircraft production is still a distant goal, India has made significant strides in manufacturing and integrating aircraft components into the global aviation value chain. Meanwhile, military aircraft manufacturing and MRO have seen growth in recent months.
In February 2024, Airbus signed an agreement with Dynamic Technologies to manufacture and assemble doors for A220 aircraft, providing a major fillip to the Make in India initiative. Additionally, Boeing announced in February 2024 that it has significantly increased its sourcing of aircraft components from India, growing from $250 million to $1.25 billion over the past decade. Additionally, GE Aerospace, an aircraft engine major, has witnessed almost 20-time growth in exports from its Indian suppliers from 2018 to 2022. Further, Airbus has plans to increase component sourcing from India.
The government is planning to set up a special purpose vehicle (SPV) to promote commercial aircraft manufacturing in India along with the smaller civilian planes, helicopters, seaplanes, eVTOLs and military aircraft, which has already seen some uptake.
India’s developing leasing and financing market
India, one of the largest global aviation markets, relies heavily on leased aircraft, with 80 per cent of its commercial fleet leased from entities based in Dublin, Hong Kong, Dubai, Singapore, Ireland, etc. These highlight India’s tremendous potential to establish a domestic aviation leasing market.
The government recognised the potential and drove the commencement of aircraft financing and leasing activities at the International Financial Services Centre (IFSC) in Gujarat International Finance Tec-City (GIFT City). Since its inception, around 26 leasing entities have registered, facilitating the leasing of approximately 150 aviation assets, including aircraft, engines, helicopters and aviation equipment. To attract international and domestic players, the government has introduced several incentives and fiscal benefits for entities setting up operations in GIFT IFSC including a 100 per cent tax holiday for 10 years. Additionally, the DGCA has amended civil aviation requirements to streamline processes for in-country aircraft transfers, re-leasing and deregistration, further easing operations for lessors and airlines.
With these measures, India is steadily building a robust aircraft leasing ecosystem, reducing its dependence on overseas lessors and positioning itself as a competitive player in the global leasing market.
In sum
India’s aviation sector is evolving rapidly, driven by innovative technologies, strong policy support and growing private investments. From enhancing MRO services and expanding regional connectivity to promoting domestic leasing and manufacturing, the sector is creating new opportunities for growth. Further, new modes of urban air mobility are making headway in the sector, offering large opportunities to tap. Apart from this, opportunities are emerging on the sustainability front, with airports striving to adopt innovative measures to reduce their carbon footprint. Further, the coming up of advanced technologies for the management of airport operations is expected to shape the sector,
going forward.
