India’s Evolving Policy on International Civil Aviation

Abstract

The Indian government's policy on international civil aviation has undergone significant changes in recent years. Tentative steps have been taken to liberalize market access for foreign carriers from some countries, as well as to relax rules on foreign investment in Indian carriers. However, the underlying conservative tendency to protect struggling local carriers still dictates overall policies. In particular, the government continues to link foreign carriers' capacity entitlements to the local carriers' ability to utilize their own entitlements. Yet, as demonstrated by the Jet Airways-Etihad deal, there could now be a willingness to link capacity entitlements to foreign ownership stakes. While the deal could have been a 'one-off' event, it has tremendous implications for the expansion plans of Indian carriers and airports. This article also assesses how India's continued conservatism in air transport policy affects the liberalization effort in the entire South Asian region.