India to invest Rs 1 trillion in setting up 100 new airports by 2024

The government has committed investments of Rs 1 trillion to build airports in the next 5 years.

India is planning to start 100 additional airports by 2024, as part of a plan to revive economic growth in Asia’s third-largest economy, according to people with knowledge of the matter.

The proposal, which includes starting 1,000 new routes connecting smaller towns and villages, was discussed at a meeting last week to review infrastructure needed by 2025, the people said, asking not to be identified as the discussion is private. Steps to start a plane-lease financing business in the country was also discussed, they said.
 

With economic activity at a six-year low and prospects of further slowdown looming, Prime Minister Narendra Modi is keen to double down on infrastructure projects in a bid to revive growth and achieve a target of making India a $5 trillion economy by 2025. Last month, the government cut corporate tax rates, putting India on par with some of the lowest in Asia, to help compete with the likes of Vietnam and Indonesia for investments amid global trade tensions.
 

India’s plans to expedite airport development still trails that of China’s, which has set a goal of having 450 commercial airports by 2035, almost double the number at the end of 2018. A spokesman at India’s civil aviation ministry was not immediately available for a comment.
 

The proposal by India’s state think tank also includes boosting the number of locally trained pilots to 600 a year and double the domestic aircraft fleet to 1,200 during the period, the people said. The Indian government has committed investments of Rs 1 trillion to build airports in the next 5 years.

Just three years back, only 75 of India’s 450 runways were functional, as airlines avoided flying to smaller, World War-era airstrips in smaller towns. But Modi’s subsidy program, which partly funds airline losses while capping fares on remote routes, has helped add as many as 38 airports to the nation’s aviation map at the start of this year, while contracts were given to airlines to start flights to a further 63 airports with no or limited connectivity.
 

While the lure of India -- with an emerging middle class flying for the first time -- has attracted companies such as Singapore Airlines Ltd. and AirAsia Bhd. to set up local units, provincial taxes in the nation make jet fuel one of the most expensive in the world. The government is aware of the high taxation burden and higher jet fuel prices, and will rationalize the tax regime as soon as next year, the people said.
 

India will also encourage the use of drones -- for which it announced a policy this year allowing unmanned vehicles to fly beyond the line of sight -- and sees the number of legal drones reaching a million by 2024, the people said. The country will prepare drone corridors by 2021, and allow delivery of goods by drones by 2023, they said.
 

To contact the reporters on this story: Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net;Anurag Kotoky in New Delhi at akotoky@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Unni Krishnan, Arijit Ghosh

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