OCTOBER 20248INDIA'S NEWEST AIRLINE SECURES APPROVAL FROM DGCA TO COMMENCE OPERATIONSPRIVATE SECTOR SHOULD COVER SHORTCOMINGS OF GOVERNMENT: S&PIndia's newest airline, Shankh Air, has received approval from the Civil Aviation Ministry to operate in the country, marking a significant milestone in its journey toward launching operations. However, the airline will need clearance from the Directorate General of Civil Aviation (DGCA) before it can officially begin flights. As the first scheduled airline from India's private sector will need to take on a greater share of the country's investment responsibilities due to constrained fiscal settings, according to a report by global rating agency S&P. With India's net general government debt elevated at around 86 percent of GDP, the government may focus on building up fiscal buffers, meaning it might not be able to offer the same level of financial support as before. The analysis, titled "India's Growing Role in the Global Economy," emphasized that the country's post-pandemic recovery has Uttar Pradesh, Shankh Air will hub at Lucknow and Noida, aiming to connect major cities across India. The airline plans to offer both interstate and intrastate routes, focusing on areas with high demand and limited direct flight options.The approval letter from the aviation ministry stated, "The company is further directed to comply with relevant provisions regulations of FDI, SEBl, etc., as well as other applicable rules & regulations in this regard." The No Objection Certificate (NOC) granted to Shankh Air will be valid for a period of three years, providing a timeframe to establish operations. The launch of this airline could significantly enhance connectivity to regions that currently experience limited air travel options, improving regional mobility across India.In the current aviation landscape, IndiGo holds over 60 percent of India's market share, making it the largest airline in the country with a current share of 63 percent. This dominant position enables IndiGo to capture even more passenger traffic as the aviation sector continues to grow. Meanwhile, Air India, the second-largest airline, is also expanding rapidly. The airline plans to absorb Vistara, co-owned by Tata Group and Singapore Airlines, by next year, pending antitrust clearance. Additionally, Air India is acquiring AirAsia India and merging it with its low-cost subsidiary, Air India Express, further bolstering its fleet and market presence. been largely driven by government infrastructure projects and household spending on investments.While the private sector currently contributes around 37 percent to India's total investments, a broader recovery in corporate investments is still to be realized. The report highlights that the private sector's hesitance to invest is surprising, given its strong position to do so. With lower corporate taxes, robust financial health, and the government's Production Linked Incentive (PLI) scheme in place, companies are well-positioned to capitalize on these opportunities yet are not investing to their full potential.The report notes that government infrastructure investments and the revival of the housing sector are beginning to "crowd in" private investments in related industries such as steel and cement. Additionally, private corporate investment is growing in emerging segments where the PLI scheme has been implemented, with electronics and pharmaceuticals being notable success stories.Looking ahead, solar photovoltaic manufacturing and advanced carbon composite batteries are poised to become major investment areas under the PLI scheme in the next few years. S&P anticipates that industrial investments will continue to gather strength, not only in traditional sectors like steel and cement but also in these emerging industries, further fueling India's economic growth. TOP STORIES
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