Indian Airports Looking For U.S. Investors

News

AWIN First Jul 29 , 2010
Neelam Mathews

While the role of U.S. companies in India cannot be underestimated, their presence in the airport infrastructure arena is lacking, but huge opportunities exist for U.S. companies, says Atul Sharma, regional VP-Indian American Chamber of Commerce, at a seminar held in Delhi.

The U.S.-India Aviation Cooperation Program (ACP), launched in 2007, has already set up numerous programs will boost government-to-government cooperation. At the recent Farnborough air show, a U.S-India airport infrastructure group was formed to encourage U.S. investments and interest.

As India’s aviation industry bounces back, 40-50 airport terminals are being built and about 30 runways are being upgraded to meet expected demand, says V. P. Agrawal, chairman of the Airports Authority of India.

Stressing the importance of remote areas to the country’s economy, Agrawal said, “We have to reach remote areas. All 20-30 airports being upgraded currently are now six times bigger [than their original size]. We are working on non-metro cities and a new layer of linkages with Tier 2 and 3 cities on a public-private partnership model for city-side development that includes hotels, convention centers and hospitals.”

India permits 100% foreign direct investment in greenfield airports and 74% in existing ones.

India has envisaged $110 billion investment in airports up to 2020, of which $80 billion will go to new airports and $30 billion to development of the present airport infrastructure, says Agrawal. He cautions, however, that investment in airport infrastructure bears high risks and returns on investment are slow.

Dinesh Keskar, VP of Boeing International and president of Boeing India, says India’s outlook is looking good, with May 2010 recording the highest number of domestic passengers at 4.8 million. He attributes this to fuel prices hovering at $70-80 a barrel, a booming economy and the fact that while passenger traffic is up more than 10%, fleet capacity is up only 8%.

Confirming the delivery of the first Boeing 787 to Air India in April 2011, Keskar says there has been a 20% increase in domestic traffic in the first half of this year from the same period in 2009.

With Boeing, Bell and Raytheon active players in civil aviation in India, there will be more participation by U.S. companies in the coming years, predicts Dale Tasharski, commercial counselor at the U.S. Embassy in Delhi.