The Indian government is planning to invest more than $12.1 billion to improve airport infrastructure within the next five years, a top official said.
Out of this, $9.3 billion is expected to come from the private sector and foreign investors, Ajit Singh, India’s Union Civil Aviation Minister said last week.
“We expect to see $12.1 billion investment in improving airport infrastructure under the 12th Five-Year Plan, of which $9.3 billion is expected to come from the private sector and foreign investors,” he said at a conference, a few days after Jet Airways announced was selling a 24 percent stake to Abu Dhabi’s Etihad Airways for $379 million. The cash injection along with the realignment of its route networks with Etihad will give the Indian carrier a solid boost and help in its next stage of growth.
Singh defended his government’s decision to allow 49 percent foreign direct investment (FDI) saying it is a step in the right direction. “The results are already showing in the form of Air-Asia’s entry into the Indian market and the Jet-Etihad deal,” he said.
India’s Tier II and Tier III cities need air connectivity as small businessmen need to travel fast. “For them, time is money. These will require huge investment,” he said.
“Indian capital is not enough to support the future development of India’s aviation industry. We will be able to provide less than half of the capital needed. The rest has to come from outside and we need to allow that to happen,” he said.
A double-digit growth year-on-year is expected to make India the world’s third biggest aviation market by 2020, if the government policies are aligned for growth, the International Air Transport Association (IATA) said in a recent report.
“The agenda to improve infrastructure, reduce costs and evolve a more reasonable taxation structure remains absolutely critical to India’s long-term success,” Tony Tyler, Director-General and Chief Executive Officer of IATA, said, in a speech in India recently.
In terms of airport infrastructure, India has got a great deal right in previous years, IATA said. However, the future investment could be spearheaded through Public-Private Partnership (PPP) model that has delivered world-class facilities at Hyderabad, Cochin and Bengaluru.
The Cohin International Airport in Kerala is a perfect example of the PPP, in which the Gulf-based non-resident Indians (NRIs) played a strong role in its development and operation.