In a groundbreaking move to boost domestic aviation capabilities, India is setting its sights on manufacturing commuter aircraft through the formation of a dedicated company (a special purpose vehicle) that will oversee the project, sources told businessline.

Accordingly, the SPV will be created under Section 8 of the Companies Act. It will be established to facilitate the implementation of the project.

Notably, sources said that the Ministry of Civil Aviation has already sought approval from the Ministry of Finance to move forward with the formation of this new entity. The proposal has been presented to the Committee on Establishment Expenditure (CEE).

“The initiative is still at the proposal stage, and deliberations on the SPV are ongoing. The primary objective of the SPV is to assemble a team of experts with a proven track record in executing such projects. These professionals will be drawn from both the public and private sectors,” sources told businessline.

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“These professionals will oversee the project from initiation to the achievement of the set targets. The SPV will manage all critical aspects of the project,” sources said, adding that the SPV may also collaborate with existing international airframe manufacturers for the initiative.

Furthermore, the initiative is part of the Bhartiya Vayuyan Adhiniyam, 2024, which was passed by Parliament earlier this month. The legislation includes provisions for regulating the design and manufacturing of aircraft.

According to sources, the SPV will be established without any requirement for initial seed funding. Instead, it will be supported through budgetary grants.

“However, the release of funds will be contingent upon the SPV achieving clearly defined milestones, ensuring that the project progresses efficiently and remains on schedule,” sources said.

“The SPV will have a tenure of five years and a clear mandate to spearhead the development of a commuter aircraft.”

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According to sources, the country aims to develop a commuter aircraft with a range of 600–700 km, fostering the growth of an aviation manufacturing ecosystem and supporting start-up airlines reliant on turboprop or small jet aircraft.

The short-haul air travel segment has seen significant growth recently, driven by the development of new airports and the emergence of regional airlines. The government’s Regional Connectivity Scheme (RCS-UDAN) has played a pivotal role in this expansion.

“The project will bring significant benefits to the country. It will enhance the manufacturing capacity for aircraft parts and lead to the development of an aircraft tailored to meet India’s unique requirements.”

“An indigenously developed aircraft will reduce travel costs and create job opportunities in the aviation manufacturing sector.”

Furthermore, it has been proposed that the SPV, once formed, make the strategic decision to either progress with the RTA-90 (regional transport aircraft) project or opt for a ‘clean sheet design’ format.

The RTA-90 project is a regional airliner with a capacity to seat 90 passengers, being designed by the National Aerospace Laboratories (NAL). The aircraft will be manufactured by Hindustan Aeronautics Limited (HAL), whereas a clean sheet design would involve the development of a completely new aircraft.

Last month, turboprop aircraft manufacturer ATR told businessline that the enhancement of last-mile air connectivity in India, through the development of airports as well as the establishment of new airlines, holds the potential to add another 80 million annual passengers in India.

ATR’s survey revealed that 90 per cent of intercity trips by all modes of transport are less than 750 km.