Mumbai, Jul 5 (PTI) The aviation and travel industries have welcomed the budget proposals to make the country a hub for aircraft leasing and financing, along with allowing higher FDI in domestic airlines, and also identifying 17 iconic tourism sites for development.

At present, the aviation financing and leasing business is dominated by entities based in Ireland and China, and the country has an insignificant role as of now. Also, aircraft financing and leasing is a profitable business providing double-digit returns to investors globally.

The present rules cap foreign direct investment by an overseas carrier at 49 percent.

"As the world's third-largest domestic aviation market, the time is ripe for us to enter into aircraft financing and leasing activities from our shores," finance minister Nirmala Sitharaman said in the budget speech Friday.

"This is critical for developing a self-reliant aviation industry, creating aspirational jobs in aviation finance, besides leveraging business opportunities available in the International Financial Services Centre in Ahmedabad," she said.

Welcoming the proposal, Sunil Bhaskaran, managing director of AirAsia India said "the plan to introduce aircraft financing and leasing will bring down the cost for carriers".

The government will bring in the essential elements of a regulatory roadmap for making the country a hub for such aviation activities, the minister said.

"The plan to enter aircraft financing and opening the FDI doors for more funding in aviation will boost the industry with a likely increase in capacity across all routes, both international and domestic," Sharat Dhall, chief operating officer at Yatra.com said.

After clocking a double digit growth for more than four years till December, domestic air passenger traffic grew at a low 2.62 percent between January and May with April growth falling into the negative territory.

American aircraft maker Boeing had last year projected that domestic carriers would need 2,300 planes worth USD 320 billion over the next 20 years amid unprecedented growth in domestic passengers.

Many of the local carriers have placed large aircraft orders with both Boeing and European aviation major Airbus. A substantial number of these planes are to be inducted into their respective fleets over the next couple of years.

Sitharaman also said the government will develop 17 iconic tourism sites into world-class tourist destinations and to serve as a model for other tourism sites.

This year's budget aims to drive robust growth for the travel and tourism industry with the government committing to strengthening infrastructure and improving accessibility, said Dhall of Yatra.com.

On the government plan to develop 17 iconic tourism sites, Dhall said this can help the country gain a prominent spot in the global tourism map.

To provide for an enabling ecosystem for growth in the maintenance, repair and overhaul (MRO) industry, Sitharaman proposed to leverage the country's engineering advantage and potential to achieve self-reliance in the aviation segment.

"The government will adopt suitable policy interventions to create a congenial atmosphere for the development of MRO in the country," she added.

On this, Bharat Malkani, president of the MRO Association of India said, "the proposal can turn us from an importer of MRO to a net exporter and create over 100,000 direct jobs and revenue of over Rs 35,000 crore in the next five years."

Being the fastest-growing aviation industry, creating a domestic MRO ecosystem will be both economically and strategically beneficial for the industry in particular and the country in general as it can bring down the overall cost of airline operations, he said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)