Mumbai: India could see several cross-border joint ventures in defence and aviation, thanks to changes in regulations, access to new technologies, need for local partners, and a growing industrial base for aviation and defence, Deloitte’s 2018 global aerospace and defence industry outlook said.

Citing a recent International Air Transport Association (IATA) study, the report also stated that India could become the world’s third largest aviation market by 2025, a year earlier than originally expected.

India will also drive growth in the commercial aircraft segment in South Asia region, which is expected to witness an over 8% passenger traffic growth annually, over the next two decades.

“The country is forecasted to have a demand for a record 2,100 new aircraft, worth $290 billion, with the majority of these being single aisle planes," Alaric Diniz, director, Deloitte India, said in a statement.

“The demand will primarily support the growth of low-cost carriers, which account for more than 60% of total flights in the country," Diniz added.

The report, authored by Deloitte Touche Tohmatsu Ltd’s global aerospace and defence leader Robin S. Lineberger and Deloitte US Center for Industry Insights’ aerospace and defence leader Aijaz Hussain, said the growth in aviation and defence is aided by government policies in the past two years. India had a defence budget of $57.4 billion during 2017-18.

“Over the last two years, the government has undertaken multiple policy initiatives to attract foreign investment in the A&D industry, including 100% FDI with government approval, increased international engagement, updated defence procurement procedures with amendments to the offset regulations and the strategic partnership model focused on key subsectors such as fighter aircraft, submarines, helicopters, and armoured fighting vehicles," the report added.

The growth has been led by the country’s focus on recapitalizing and strengthening its military to counter potential threats from China and Pakistan, as well as efforts to upgrade existing assets, the Deloitte report added.