Atmanirbhar Bharat And The Indian Aviation Sector (2020): Policy Reforms, Progress, And Strategic Pathways

Policy Update
Charu Singh

Background

Initiated in May 2020 by the Government of India, the Atmanirbhar Bharat Abhiyaan (‘Self-Reliant Initiative’) was envisioned as a catalyst for the economic revival of the country post the COVID-19 pandemic. A critical component in this vision was the aviation sector because of its potential to strengthen domestic manufacturing, connectivity and national security. In order to foster indigenous capacity, build a globally competitive ecosystem and promote investment, the Ministry of Civil Aviation aligned reforms specific to various sectors under this initiative.

Functioning

Infrastructure and policy: Through cutting flight times, fuel costs and carbon emission, the Indian Air Force arranged additional airspace for civilian use which led to around 895.1 crore in savings and CO2 reduction of around 1.95 lakh tons as of August 2020. Moreover, around 30 new airports were added under Atmanirbhar Bharat for infrastructure for the expansion of regional connectivity in tier 2 or 3 cities and the Northeast. This boosted indigenous manufacturing of aircraft parts and spares and promoted reforms in maintenance and repair.

Finance: To reduce foreign leasing dependence, policy reforms enabled hubs like GIFT City, Gujarat to emerge as aircraft leasing centres, offering 10-year tax exemptions and attracting global lessors.It’s better if we frame it this way: Under the public-private partnership model, 6 airports were privatised to invite private partnership and capital infusion, while maintaining government oversight. Furthermore, the movement of agricultural produce, agricultural exports and farmer incomes could be significantly enhanced due to the Krishi Udan Scheme 2020.

Technology

The digitalization of travel data like biometric-enabled travel through DigiYatra and improved air traffic management through the platform of GAGAN Navigation system were classic examples of incorporating technology and improving the efficiency of the aviation sector. The Airfield security and operational sustainability has also been enhanced by ensuring stricter compliance with the ICAO standards. There has been focus on making airports carbon neutral.

Performance

After the Atmanirbhar measures of new RCS routes and focus on improving airport infrastructure in India, the number of airports has increased from 137 in 2019-20 to 153 in 2020-21, which was the pandemic year. The number of RCS-UDAN routes that were operational also rose from 235 in 2019-20 to 335 by 2021 which enabled over 3.4 million passengers to be carried.

The investments in the Maintenance, Repair, and Overhaul (MRO) sector also improved post the policy reforms, leading to a rise in land tenure and rationalisation of tax rate. The domestic passenger traffic experienced a sharp drop due to the pandemic in 2020-21 but resilience measures were taken for recovery. Moreover, by prioritising sustainability, 4 carbon neutral airports could be achieved by 2024.

Impact

The policy reformation brought to the aviation sector through Atmanirbhar Bharat 2020 significantly increased the public and private investments in the airport infrastructure, MROs, and ancillary aviation services. The investments attracted were over 40,000 crore rupees between 2018-23. An obvious positive outcome of this was enhanced connectivity which boosted tourism and business as well.

Moreover, with indigenization and regional expansion, employment could be substantially increased. Many direct and indirect jobs were created across various operations, including engineering and logistics. Since there has been so much focus that’s been laid on management and operations in this sector as well, the policies have helped in improving the sustainability of the sector through reduced carbon emissions, eco friendly operations being promoted and supporting climate action goals. The reforms also proved to be resilient in the crisis when over 18 million Indians were repatriated during COVID through the Vande Bharat Mission demonstrating the emergency response capabilities of the sector.

Emerging Issues

Due to pandemic induced losses, the high cost of fuel and over limited fiscal capacity, the airlines struggled with liquidity even after government support through extended schemes and credits. So financial vulnerability remains one of the major issues under this sector. Another issue is the complexity of regulatory systems that cause delays in airports especially when it comes to cargos, drones and leasing. Delays in procedural clearances diminish the overall efficiency of the sector.

Although policies with respect to MRO were liberalized, the domestic MRO level remains below potential because a strong MRO industry needs more than policies, it needs highly trained engineers, technicians, and support staff. Growing the MRO industry needs a more skilled workforce. Moreover, the Indian Abviation sector lacks sufficient indigenization since its heavily dependent on the global Original Equipment Manufactrurers (OEM), emphasizing on the need for development of research, technology transfer and joint ventures.

Way forward

The government should simplify the rules for the aviation sector especially in things like land acquisition and joint ventures so that new airports and maintenance bases come up quickly. Further, its necessary for India to focus on indigenization of the manufacturing of various aviation related equipment such as airplane parts and not rely so heavily on global OEMs because boost in local manufacturing will boost employment generation as well in addition to a reduction in India’s dependency on other countries. International partnerships and initiatives like “Make in India” are great for making this happen.

Another aspect India needs to work upon is building a skilled workforce. The aviation industry is ever evolving with new technologies like drones, electric taxis and AI. investing in the research and training in these areas will help the workers keep up with the pace of development and not slow it down. Moreover, digital tools should be more deeply incorporated for passenger travel as well as cargos and goods to enable a smoother and quicker move due to paperless check-ins and faster security checks.

The government should continue its effort in making the airports greener, cleaner and more eco-friendly. This will ensure lesser power usage and fewer emissions. This could be done through leasures like solar panelling and better waste management. Lastly, another big help to the aviation sector would be financial support by the government in ways like cheaper loans and tax breaks. This can also be done by reducing fuel prices. This would help the airlines especially in times of crisis like COVID-19

References

Airports Authority of India. (2022). Airport infrastructure development: Aatmanirbhar Bharat progress report. https://www.aai.aero/
India Investment Grid. (2022). Aviation infrastructure investment opportunities. https://indiainvestmentgrid.gov.in/
Ministry of Civil Aviation. (2023). Annual report 2022-23. https://www.civilaviation.gov.in/en/about-annual-report
Ministry of Environment, Forest and Climate Change. (2019). Environmental clearance for civil aviation sector projects. http://environmentclearance.nic.in/
Parliamentary Standing Committee on Transport, Tourism and Culture. (2021). Demand for grants report – Civil aviation. https://sansad.in/
Press Information Bureau. (2020). AatmaNirbhar Bharat Abhiyaan: Government provisions for the aviation sector. https://pib.gov.in/

About the Contributor

Charu Singh is currently pursuing her postgraduate degree in Political Science (Honours) from Gargi College, University of Delhi. She is a research intern at IMPRI.

Acknowledgment: The author sincerely thanks the IMPRI team for their valuable support.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.