Liberalization in the mid to late nineties in the Indian Aviation sector saw a number of private players entering the sector and during the implementation of the Eleventh Five-Year Plan (2007-2012), India emerged as the ninth largest civil aviation market in the world. The Eleventh Five-Year Plan period witnessed a rising trend of domestic carriers adopting the low cost carrier model.



  • Directorate General of Civil Aviation

The main regulatory body established under the ministry of civil aviation is The Directorate General of Civil Aviation (“DGCA“) that supervises civil aviation in India. The functions of the DGCA include

  • regulation of air transport services to and from and within India in compliance with the Aircraft Rules, 1937,
  • licensing of pilots,
  • aircraft maintenance engineers and monitoring of flight crew standards registration of civil aircrafts and certifying their airworthiness,
  • investigation of minor air incidents and providing technical assistance to Courts / committees of Inquiry appointed by the Government;
  • supervision over Flying/Gliding Clubs, licensing, safety oversight and surveillance of aerodromes and air carriers,
  • advising the Government on matters relating to air transport including bilateral air services agreements with foreign countries.
  • Airports Authority of India

The Airports Authority of India (“AAI“) was established by the Airports Authority of India Act, 1994 and was formed as a result of merger of International Airports Authority of India and National Airports Authority through the Airports Authority Act, which came into existence on 1st April 1995. The authority was constituted with a view to accelerate the integrated development, expansion and modernization of the operational, terminal and cargo facilities at the airports in the country conforming to international standards, the AAI is entrusted with the task of regulating airports all over India.

  • Bureau of Civil Aviation Security 

The Bureau of Civil Aviation Security (“BCAS“) was initially set up as a cell of the DGCA in 1978. Its basic functions was to coordinate, monitor, inspect and train personnel in civil aviation security matters. The BCAS is the regulator for civil aviation security in India. The authority is presently entrusted with the functions which include laying down standards and measures in respect of security of civil flights at international and domestic airports in India and Indian aircraft operators at foreign airports and standards for pre-embarkation security and anti-sabotage measures in respect to civil flights and ensuring their compliance.

  • Airports Economic Regulatory Authority

Airports Economic Regulatory Authority (“AERA“), regulates tariffs and other aeronautical charges, as well as monitors airport’s performance standards. It creates a level playing field and fosters healthy competition amongst all major airports (government owned, public private partnership – based, Private), encourage investment in airport facilities, regulation of tariffs of aeronautical services, protection of reasonable interests of users, operation of efficient, economic and viable airports



The government has notified changes in Foreign Direct Investment (FDI) norms on civil aviation, which will permit non-resident Indian nationals to own 100% stake of Air India.

The Ministry of Finance on July 27, 2020 vide a notification amended the FEMA (Non-debt Instrument) Third amendment Rules, 2020 under which foreign investments in M/s Air India Limited, including that of foreign airlines shall not exceed 49% either directly or indirectly except in case of those NRIs, who are Indian Nationals, where foreign investments is permitted up to 100% under automatic route.

Substantial ownership and effective control of Air India Limited shall continue to be vested in Indian Nationals as stipulated in Aircraft Rules, 1937.

As per the present FDI Policy, 100% FDI is permitted in scheduled Air Transport Service/Domestic Scheduled Passenger Airline (Automatic up to 49% and Government route beyond 49%). However, for NRIs 100% FDI is permitted under automatic route in Scheduled Air Transport Service/Domestic Scheduled Passenger Airline.

The government permits 100% FDI under automatic route in helicopter services/seaplane services requiring Directorate General of Civil Aviation (DGCA) approval.


Lok Sabha has recently passed Aircraft (Amendment) Bill, 2020 which seeks to amend Aircraft Act, 1934.

The bill seeks to propose STATUTORY STATUS TO REGULATORY INSTITUTIONS and DGCA will be entrusted to carry out oversight and regulatory functions with respect to matters under the bill. BCAS will perform regulatory oversight functions related to civil aviation security. AAIB will carry out investigations related to aircraft accidents and incidents. It was proposed that providing regulatory institutions would improve India’s aviation safety ranking as suggested by International Civil Aviation Organization. (ICAO).

Further, the bill proposes to increase the fine amount for violations of rules from Rs. 10 lakh to Rs. 1 crores for aviation industry players. The central government has been given power to cancel licenses, certificates or approvals granted to a person under the act if the person contravenes any provisions of the act.

– Purti Sharma
Associate advocate/Legal coordinator
ASC Solicitors and Advocates

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