Editorial Analysis for IAS - TOBACCO INDUSTRY IN INDIA


  • The shipping and aviation industries contribute considerably to most countries’ GDP, therefore ensuring economic growth and development is vital.
  • Many countries throughout the world have already offered large finance packages for their national aviation industries, recognizing its importance.
  • The Indian government has also announced civil aviation changes as part of the Atma-Nirbhar Bharat Abhiyan. However, in order for the civil aviation business to thrive, structural issues must be addressed.

Initiatives under the Atmanirbhar Bharat Abhiyan to bring reforms in the Civil Aviation Sector:

  • Airlines are required to fly a specific amount of flights on smaller, less profitable air routes under the Route Dispersal Guidelines (RDG). These limits on the use of Indian airspace would be lifted, according to the government.
  • This will result in the most efficient use of airspace and a reduction in fuel consumption.
  • Public-Private Partnerships (PPPs) are being used to develop airports
  • Six new airports will be auctioned under the Public-Private-Partnership (PPP) model for their development, in addition to the current ones (e.g. airports in Delhi, Mumbai, and Hyderabad).
  • Aircraft Maintenance, Repair, and Overhaul Global Hub
  • India’s government wants to make it a global center for aircraft maintenance, repair, and overhaul (MRO).
  • In addition, a convergence between the military and civil MROs will be formed in order to reduce airline maintenance costs.

Problems with the Civil Aviation Sector:

  • Deficit in Infrastructure:
  • Inadequate hangar space and a lack of land to develop airports at their current locations, especially in big cities, are two of the sector’s significant challenges.
  • A barrier is also the building of more airports using the PPP model with the goal of enhancing aviation infrastructure without the government pumping in more expenditures.
  • Airport infrastructure development is a long-consuming process that frequently experiences delays due to a variety of factors, including the time it takes to obtain regulatory clearances.

High Fuel Prices:

  • India has a 45 percent fuel expense as a percentage of operating costs, compared to a global average of 30 percent.
  • Because of hefty national and state taxes, aviation fuel prices in India are typically 60% higher than prices in ASEAN and the Middle East.
  • As a result, the profitability of the civil aviation business is subject to global oil price volatility.

Lack of skills:

  • Shortages and gaps in the availability of industry-recognized capabilities, ranging from airline pilots and crew to maintenance and ground handling staff, limit the sector’s expansion.

Ways to Improve Civil Aviation Infrastructure in the Future:

  • There is a pressing need to complete the UDAN initiative’s ongoing projects in a timely way. Furthermore, under the International UDAN program, the present capacity of international airports should be increased.
  • The government’s plan to make India a global hub for aircraft maintenance, repair, and overhaul (MRO) services will save airlines money and provide liquidity.
  • Convergence of civil MROs with the defense sector should also result in scale efficiencies and long-term benefits.
  • The creation of a manufacturing environment in the country will be aided by the formulation of long-term strategies for advanced research in aviation technologies.

Address the Skilled Manpower Shortage:

  • To incorporate the latest technology and management methods in the aviation business, there is a need to promote collaboration between original equipment manufacturers (OEMs), industry, and educational institutes.

Increasing Financial Resources:

  • Aviation turbine fuel (ATF) taxation and pricing should be harmonized to worldwide benchmarks by considering placing it under the GST umbrella.
  • Non-aeronautical earnings can be increased by monetising vacant real estate near Airports Authority of India (AAI) airports in all major cities.

Developing India as a Transportation Hub:

  • By establishing itself as a transhipment hub in the region, India can gain a variety of benefits.
  • This would improve India’s trading capacity as a service provider, allowing it to become a foreign exchange earner and enabler of improved regional connections.
  • This can be accomplished by developing digital business enablers including e-contracting, multimodal e-transportation, e-compliances, and an e-grievance redressal module.
  • In this context, India’s National Civil Aviation Policy 2016 and National Civil Aviation Program 2018 can assist the country in becoming a key global civil aviation market.