Budget
Budget 2025: Will India’s aviation sector fly higher?
Summary
India's aviation industry is booming with record passenger numbers and significant aircraft deliveries. Recent government budgets have aimed to enhance MRO capabilities, expand airport infrastructure, and improve regional connectivity, setting the stage for further growth in the sector.
New Delhi: India's aviation sector is growing rapidly, this is evident from record breaking domestic passenger movement and pending delivery of over 1000 aircraft to Indian airlines. In November 2024, for the first time ever the daily domestic passenger numbers crossed 5 lakh mark. If one looks at the average daily domestic passenger movement since the beginning of 2025, it is near the 5 lakh mark, so the momentum is continuing. As per DGCA data, the domestic passenger numbers are set to reach yet another record high, crossing the 15 crore mark for the second year in a row.
In calendar year 2023, Indian airlines carried 15.20 crore domestic passengers. As per the data till November 2024, Indian airlines have carried 15.96 crore passengers till now. Overall the domestic passengers number is set to cross the 16 crore mark for the first time.
Ratings agency ICRA expects the upcoming budget could give relief to the aviation industry if rationalisation in the duty structure of aviation turbine fuel (ATF).
Kinjal Shah, Senior VP, Corporate Ratings, at ICRA told Mint, "Budget 2025 is expected to reiterate the focus on improving regional connectivity through the Regional Connectivity Scheme (RCS) or Ude Desh ka Aam Nagrik (UDAN). The Budget is also likely to focus on setting up new airports and expanding the existing airport capacities at some key airports to help address the current airport infrastructure constraints faced by the airlines and to improve connectivity with the underserved/unserved destinations to boost tourism."
Thrust on self-reliance
ICRA expects that in line with the government’s increasing thrust on Atmanirbhar or Make in India, the budget could focus on further incentivising the MRO sector and push towards building the requisite infrastructure to promote the aircraft leasing business domestically.
In the last few years, the Finance Minister made several announcements for the aviation sector. In FY25 union budget, FM Nirmala Sitharaman announced incentives to boost the maintenance, repair and overhaul activities (MRO). FM announced extension to the period for export of goods imported for repairs to 1 year from 6 months & time limit for repair of goods for repairs under warranty from 3 years to 5 years.
In FY24's budget, FM announced plans to revive 50 additional airports, heliports, water aerodromes & advance landing grounds. In FY23's budget, FM announced intention to monetize the next set of airports.
