Govt to set up SPV to create ecosystem for India-made aircraft

The government plans to set up a special purpose vehicle to develop an ecosystem for aircraft manufacturing over the next five years, aiming to scale up the manufacture and export of locally made planes, the civil aviation minister said on Wednesday.

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“To strengthen the idea of building our planes, we want to form a team in the sense of an SPV (special purpose vehicle) and we are trying to see who can come together, who are the important people in this industry – experts, technicians, government,” Union civil aviation minister Ram Mohan Naidu Kinjarapu told journalists.

“We want to inform the industry that the government is strongly pushing into the idea of India manufacturing their own planes,” he said on the sidelines of the 10th PHD Chamber of commerce and industry Global Aviation and Air Cargo Summit 2024 in New Delhi.

Nascent ecosystem

The manufacturing and assembly ecosystem in the field of civil aviation in India is still at a nascent stage as the all the aircraft operated by airlines in India are assembled overseas.

In March 2022, Hindustan Aeronautics Ltd had introduced Hindustan 228—a 19-seater aircraft, designed by Dornier of Germany, that can be operated in semi-prepared and unpaved airstrips.

Among the commercial airlines of India, state-run Alliance Air has one of these Dornier 228 aircraft in its fleet of 22.

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“There have been some instances and the major player in this has been HAL which has already manufactured 19-seater aircraft which is with Alliance Air, but we want to do it on a big scale where we are not only catering to the demand in the country but also become an exporter of those planes,” Naidu said.

While the manufacturing ecosystem is yet to take off in the civil aviation field, it received a boost in October 2022 when the foundation stone was laid for the first India-made military aircraft, the C295, by a private company. The Vadodara-based manufacturing facility is a collaboration between Tata Advanced Systems Ltd and Airbus Defence and Space S.A. Spain to manufacture C-295 transport aircraft.

The first India-made C295 is expected in September 2026.

Prepared to collaborate

Naidu said the civil aviation ministry is confident of collaboration with original equipment manufacturers such as Airbus and Boeing for know-how and expertise. The ministry will chalk out a plan, address the concerns of the global industry and bring in reforms over the next five years through this SPV for the sole purpose of building an aircraft final assembly line in India, he said.

These plans come at a time when India has emerged as one of the fastest growing aviation markets of the world but with a low single-digit air penetration rate, which gives a significant scope for growth.

The domestic aviation market has more than doubled to a passenger traffic of 152 million passengers in 2023 from 61.4 million passengers in 2013. Indian airlines such as IndiGo, Air India and Akasa Air also expect to induct capacity of more than 1,500 aircraft over the next decade in line with an anticipated rise in air travel demand.

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“This is a very good initiative because any developed economy needs to have a very strong aerospace infrastructure, and own equipment and assets make a lot of difference both from strategic military point of view and civil point of view. This is a high-technology area and there are a few countries which are making the whole aircraft individually such as the US, France, Russia and for engine UK also. It will bring all the stakeholders under one platform and will give a path for the future,” Vishok Mansingh, chief executive officer of Vman, an aviation leasing firm said.