Impact of aviation on Indian GDP remains of a high order

Aviation in India supports 7.5 million jobs, including 3. 90 lakh direct, 5.70 lakh in the value chain and around 6.2 million in the tourism sector. It also contributes around $30 billion annually to India’s GDP, according to data shared by the International Air Transport Association (IATA).

The direct and indirect economic tasks related to air transport collectively contribute five percent of the country’s Gross Domestic Product (GDP). After all, a thriving aviation sector positively impacts the overall economic performance. Airlines, airport operators, airport on-site enterprises (restaurants and retail), aircraft manufacturers and air navigation service providers employ 404,000 people in India. In addition, by buying goods and services from local suppliers, the sector supported another 943,000 jobs. On top of this, the sector is estimated to support a further 553,000 jobs through the wages it pays its employees, some or all of which are subsequently spent on consumer goods and services. Foreign tourists arriving by air, who spend on the local economy, are estimated to support an additional 4.3 million jobs. In total 6.2 million jobs are supported by air transport and tourists arriving by air.

The air transport industry, including airlines and its supply chain, are estimated to support $13 billion of India’s GDP. The spending by foreign tourists supports a further $22 billion of the GDP, totalling to $35 billion. In total, 1.5 per cent of the country’s GDP is supported by inputs to the air transport sector and foreign tourists arriving by air. The important benefits from air transport go to passengers and shippers and the spillover impacts on their businesses. The value to passengers, shippers and the economy can be seen from the spending of foreign tourists and the value of exports. A key economic flow, stimulated by good air transport connections, is foreign direct investment, creating productive assets that will generate a long-term flow of GDP. However, India’s passenger facilitation (2.7/10) scores below the average of Asia-Pacific (4.7/10). As per the WEF’s Travel & Tourism Competitiveness Index, India ranks 49 for visas and is at 25 as regards cost competitiveness. It should be noted that in all these higher scores and ranks are better.

India’s facilitation of air cargo through its customs’ and borders’ regulations ranks 51st out of 124 countries in terms of the Air Trade Facilitation Index (ATFI) and 44th out of 135 countries in eFreight Friendliness Index (EFFI).

The air transport market in India is forecast under the “current trends” scenario to grow by 262% in the next 20 years. This implies an additional 370.3 million passenger journeys by 2037. If met, this increased demand would support approximately $126.7 billion of GDP and almost 9.1 million jobs. Long-term projections are even more optimistic, with the potential for the aviation industry to contribute up to $one trillion annually to the Indian economy by 2043. This growth is underpinned by a large population, rising income, a robust economy and substantial investments in infrastructure and technology.